YETI Holdings, Inc. Aktie

All right. Good morning, everyone. Welcome to YETI's 2026 Investor Day. My name is Arvind Bhatia, and I lead Investor Relations at YETI. Thank you all for joining us, whether you're here with us in Austin or tuning into our webcast. We have an exciting day ahead for all of you.

Now there was one part of the agenda that we tried to innovate but could not, our forward-looking statements. Now, those of you who join us on our earnings calls and have seen our SEC filings, you will recognize these. They're durable, dependable, if you ask me, built to last forever. So pretty much on brand. I'll give you guys a moment to review the information on the slides. While you do that, I do have a few quick announcements for you. Before we begin, please silence your phones. There will be a Q&A session at the end. So if you could refrain from asking any questions until then, that would be great. We'll break for lunch around noon. Following that, you'll have a chance to see some of our upcoming products if you're here in Austin. And finally, if you've signed up for the Innovation Center Tour, shuttles will depart around 12:45, and your group number should be on your badge. And with that behind us, let's get to the more interesting part of the day. Thank you.

[Presentation]

All right. Good morning, everyone. Thanks for joining us today. Welcome to YETI for those in person and those joining via webcast. We're excited to get going, and I want to welcome you and also talk about why we invited you to Austin. YETI is entering a new phase, one where we accelerate growth, expand profitability, creating a powerful engine for value creation. And we want to show you in this room with the people who are building it, what that means for the next several years.

Before I go further, I want to acknowledge the YETI team. Several of them are here today. You're going to hear from many of them on the stage. But everything we do is a result of their work, their commitment and their belief in this brand. They're the reason we're in this position, the reason this brand means so much to so many. So turning to the theme of today. The theme of today is built for the wild. It's not new, and it's not simply a nod to where we've been. It's where we're going. It stands the test of time. And it's what makes this team and this brand stand apart. It's the story of YETI, and I'm immensely proud of it and the people behind it. We spent 20 years building a brand with a field-tested and enduring foundation, products that perform, a business that has proven to get stronger through time regardless of the environment.

But today is not about celebrating the last 20 years. It's about showing you why the next chapter will be stronger. As we enter the next decade, we're focused on 4 things: the next $1 billion of revenue, the next $1 billion platform, $1 billion outside the U.S. and the next $1 billion plus of free cash flow. Everything today connects to those 4 ideas. And today, we intend to prove, not just show, but prove and describe how we get there, moving with more speed, more conviction built on an incredibly strong foundation. It's the path to building a larger, more capable and more durable global company, a company with greater reach, expanding audiences, broader product platforms, a longer runway for growth, enhanced margins, steady free cash flow and the ability to generate in a predictable way, increasing value over time.

Now I think most of you and most investors understand that YETI is a strong brand. What I want to prove today is something different. We've earned the right to chase aggressively being a truly global company. For most of our history, we are grown by protecting the brand, earning trust one decision at a time. That discipline is still here. That hasn't gone. But that same discipline has built the capability and the confidence to move at a different pace. Bolder about what we build, bolder about where we sell it, bolder about how far this brand can travel.

Looking back, we got a lot right, but not everything. When I look back at COVID, I think what an incredible time of growth and record results. We took care of our people. We scaled the business. We transformed our D2C and wholesale. But we missed some moments. We missed some moments to invest more deeply, more aggressively for the future, the opportunity to react fast. So we learned from that. And when the global tariff risk emerged, we applied that lesson to move fast and to make real impact. Our team accelerated our supply chain transformation and in less than 20 months, shifted 90% of our Drinkware capacity. That's a massive, massive opportunity. And it created quality productivity opportunities, but it also built muscle. That's our team at its best.

As you will see today, we've applied that bias to speed to innovation and to our global commercialization and the global commercialization opportunity. We'll come back to that a bit later. It's the kind of organizational capability that compounds the ability to move fast, execute under pressure and emerge stronger. That same muscle that transformed our supply chain is now being applied across the full business through a program we call Project Upcycle. It's a structured enterprise-wide initiative targeting $100 million of productivity improvement, not as an aspiration, but as a prioritized, governed and measured commitment. It's already underway, and it's already delivering results. When I step back, the point is we've earned the right to push harder because we've built the capability and the team. Many of you here in this room saw some of that team last night, and you'll see much of it today.

So now when I turn to today. We've organized today around 4 pillars: brand, innovation, U.S. commercialization and global expansion. Each one of those areas is going to be presented by the leader who's building it. Bill is going to show you that our brand has permission and room to run and that our brand is a compounding advantage. I think some of you got to see a little bit of that last night. And Hannah and Layne are going to prove out our innovation engine, how we're turning iconic products into scalable platforms across Drinkware, Hard Coolers, Protective Cases and Bags & Soft Coolers. Stuart is going to show you a more sophisticated, more productive commercial engine in the U.S. and opportunity to meet the unmet demand. And then David and Mitch are going to talk you through a proven go-to-market playbook that's scaling faster and more systematically around the globe. Scott will come up and he's going to bring it all together, the financial model, the detail on Project Upcycle and what we're committing to. That's the day.

But I'm going to sneak in there and I'm going to add a little bit of color on the future beyond the model that gets us fired up about stacking on top of this plan. But I want to be very clear about one thing. Today is not about dreams. Everything you will hear today is in flight and being actioned, including those items that are beyond the plan. Put it all together, and it's a compounding system, one we're confident in and committed to.

So when I step all the way back and people ask me what kind of company YETI is, I usually start with a simple belief. We refused to accept that durability, performance and design had to be trade-offs. That belief built the first cooler in Driftwood. It built all the products that followed, and it continues to shape how we run the business today. I've said many times before that product is our heart and brand is our soul. What's rare about YETI and what is genuinely difficult to replicate is both in balance. Unparalleled product with an aspirational brand, durable enough to be the foundation of everything we're building next.

This is what has allowed YETI to expand without losing who we are. Good brands have customers. Great brands turn ownership into advocacy. That's what we do, from stickers on trucks to tattoos to wedding cakes. YETI does more than live on shelves. It lives inside communities and it shows up in meaningful moments. People don't just buy our product. They carry the brand forward. That's why we say we're growing by communities, fueled by commitment. Getting into brand. One of our truth is we don't define people's wild. You heard a little bit of this last night. People define it themselves. Your wild might be a duck blind, it might be a weekend soccer tournament, an early morning surf session, a job site, a tailgate, a fishing boat, a commute to work. We're earning our place in more moments, more often with more people. It's incredibly powerful done right, but it's also easy to get wrong.

Most brands eventually face a choice. They scale and they lose what made them special or they stay rooted and they fail to grow. What we've done over 20 years and what we're going to do going forward is we're going to do both, preserving depth while expanding breadth. We earn relevance by speaking the language of our customers, showing up where it matters to them, connecting with the people they respect and value. It's how this brand was built, and it's how we believe it should keep growing. It's not random. It's deliberate. That matters because as we enter new spaces, it's not a push. It's a pull from the community by the active deliberate choices we make.

As you're going to hear from Bill, community is the brand. And our communities introduce YETI to who and what's next. It's powerful and it's hard to replicate. What that gives us is something incredibly valuable, permission, permission to enter new moments, permission to build new product platforms, permission to broaden the brand without turning the brand into something average. But that permission has to be earned and it has to be protected. I think about that every day. Every decision we make is either a deposit into the brand or withdraw from it. As you scale, you're doing a little bit of both. When I joined YETI over 10 years ago, roughly 40% of our sales came from the state of Texas, and we were about 1/5 of our current size, truly a brand born along the Gulf Coast.

As we scale beyond regional strength, being pulled into national and specialty retailers asked for on yeti.com, shopped on Amazon, all the way to becoming a global brand, we worked hard to keep our roots in our original communities while investing behind growth, showing up where it mattered, broadening access while staying true to the brand. And the net result was additive and scale, breadth and depth on display. Bill is going to take you deeper, but permission is what makes boldness possible. It's the license behind the next $1 billion everything. You don't get to push with a brand people don't trust. We've earned that trust.

Now I'll talk a little bit about innovation and our second key pillar. Growth doesn't just come from entering new categories. It comes from discovering opportunities within the platforms we've already built. It starts with the core, finding the untapped and unmet demand. As you're going to hear today, our Home & Hydration and Gear & Equipment platforms remain durable growth engines in their own right, not just a base to build from. We expect them to be drivers of growth, customer acquisition and brand expansion. When coupled with Soft Coolers & Bags, we see the opportunity clearly.

So let me frame the 3 platforms as we see them. Drinkware, which we internally refer to as Home & Hydration, represents roughly 60% of our net sales, and it's proving itself a durable and scalable global growth platform. We've been clear about the headwind and drag on growth in 2026, but it's been more than offset by the global diversification and innovation across the rest of the platform, hydration to everyday use stackables, like the ones in front of you. I'd encourage you to separate them, drink out of them, you'll understand why people buy multiples of our products. And we've moved to food storage and cookware, and we'll talk more about that when Hannah comes up.

The products driving the headwind will largely lap by year-end, resetting the base heading into 2027. Underneath the noise, the platform is healthy and expanding, and the partners who've embraced our expanded portfolio are seeing the benefits. Hannah is going to walk you through why we're confident in Home & Hydration is a long-term trajectory.

Now turning to Coolers & Equipment and within Coolers & Equipment, Gear & Equipment. From our personal sized Roadie Hard Coolers to the recently expanded GoBox family of protective cases, this is where YETI started, and there's meaningful innovation and potential ahead.

And finally, on Bags & Soft Coolers. This is where we're choosing to be aggressive at scale. The reason we believe this has become a meaningful platform for YETI is because we already have the assets required to win, the credibility and thermal performance, the authority and durability and design, a brand that moves without asking the consumer to make a leap. We're already being pulled into adjacent use cases, travel, work, sport, everyday routines. It's not a stretch. It's a continuation. We said before the scale of Bags & Soft Coolers is massive.

Since 2028, (sic) [ 2018 ] our platform has tripled in size, and we're just getting started. From our earliest Panga Submersible duffles, which we made simply, frankly, because we could, to the latest Daytrip, Camino, Crossroads and Palo backpacks. This product platform is scaling fast. The strategic point is simple. We're not chasing growth by stretching the brand. We're building growth by applying the brand where we've earned the right to compete. And that's exactly how Bags & Soft Coolers becomes our next $1 billion platform. And make no mistake, Gear & Equipment is right behind it.

You earn trust with exceptional products. And with that trust, consumers reveal unmet needs and you expand thoughtfully around those opportunities. The key word is thoughtfully. We have no shortage of ideas. My inbox is full of them. Frankly, many of you have given me some. You're welcome to drop a few off before you leave today. The challenge is deciding which opportunities deserve our attention because every decision has to strengthen the brand. Every decision has to create consumer value. Every decision has to earn its place. Hannah and Layne are going to show you how our innovation system works and why we believe the engine will drive meaningful potential.

Turning now to our third pillar. Candidly, this may be one of the most underappreciated opportunities in the business. Over the past several years, as you've seen, we've dedicated ourselves to building a strong innovation engine while stoking the brand. It's enabled us to make more products today than in any time in our history. And in some cases, our innovation has outpaced our commercialization. One phrase I hear more often than I'd like is I didn't know YETI made that. To be clear, I don't take that as a compliment. It's an opportunity. I guess some of you experienced that last night during your store walk. In fact, I had a couple of you come up and say that last night during our store walk. It's the gap between what we've built and what our consumers realize we have, and that gap is real growth and real unmet demand. It relies on getting the right product in front of the right consumer in the right channel at the right time. It's there, and we're going after it.

That's what our commercialization work is about, not simply launching products, but scaling them, extending them, matching them to consumer occasions, giving each channel a clear role. The unique thing about YETI is the number of ways we reach a consumer from a fly shop to a hardware store, surf shop to a home goods store, national and specialty retail, Amazon, yeti.com, credible B2B business and our own stores. That diversity is a competitive advantage, well executed. And there remains opportunity in the U.S. to continue to be where the consumer shops. When we look at our channel expansion through the lens of complementing our existing go-to-market and intercepting new consumers, we've seen what happens when we get that right. And that's the kind of opportunity we're focused on now, making the system more precise, the assortment more productive, making launches work harder, ensuring the innovation we create has the commercial support to scale. Stuart is going to walk you through exactly how and why that commercial engine in the U.S. works.

Now let's talk about our fourth pillar, global expansion. We're just at the start of a massive opportunity. International has evolved from an emerging business into a core part of our growth model. The brand has proven it travels, and we have a repeatable playbook that is scaling faster as we enter new markets. It's awesome to see. I still remember being asked years ago if YETI had any opportunity outside the U.S. And frankly, even at one point outside of Texas. Global revenue has grown from 2% of our business in 2018 to over 20% today. But what's more important than the numbers is the model behind it. Every primary market we've entered has scaled faster than the one before, Canada, than Australia, then Europe, each one built on the learning, the infrastructure and the brand assets from the previous market, increasing speed of execution and building confidence in a repeatable playbook.

And much like how we build communities, we're being pulled into markets. Our brand, our ambassadors, our partners, our social media have made demand and frankly, desire more visible. We can see where people are finding us, where the brand has heat before we fully built out the market. Once we see the signal, the real work follows, building local capabilities, partnerships, teams and an operating model to support that demand over time. That's what turns international into a scalable growth engine. We now have a clear way to identify where YETI should go next, how we should enter the market, the capabilities that we need and how to scale the brand for the long term. Market by market, we're building conviction. We enter each one a little bolder than the last because the last one worked. That's the model getting stronger. David and Mitch are going to show you exactly what that looks like and why we believe international will become an even larger share of the business. I will promise you their conviction will be obvious.

Turning to the system. When you step back and look at the whole picture, this is what we see, an iconic brand that continues to earn relevance with consumers globally, an innovation engine creating durable product platforms, a commercial engine translating innovation into sustained growth and an international playbook expanding our reach around the world, all complemented by a financial model designed to convert that growth into increasing profitability, strong free cash flow and disciplined capital allocation. That's the system, designed to compound, designed to create shareholder value, designed to make the next chapter of YETI stronger than the last.

So now before I turn it over to Bill, let me give you a glimpse of where we land because the growth story only matters if the model beneath it delivers. We're creating a clear path to increasingly diversify our U.S. core business, international expansion, new product platforms. We built the model to work up and down the growth curve, the payoff of what this brand, this portfolio and this team can deliver. But I want to come back to Project Upcycle because it's central to how we bridge top line growth to sustained margin expansion and operating income growth. We've shown over time the ability to absorb the shocks, rebuild our margins and turn them into the energy that powers us. Our gross margin resilience is tangible evidence here, but we aren't satisfied. I want to be clear about what Upcycle means. This is not a target we aspire to. It's a discrete commitment with prioritized initiatives, enterprise accountability and rigorous governance and measurement. Every work stream has an owner, a time line and a financial target. That's how we run it.

And the purpose of Upcycle is to amplify our future to build a more productive operating model, one that does 2 things at the same time. First, it funds the growth you're hearing about today in brand, innovation, commercialization and international. Second, it expands margins sustainably through disciplined execution, not through onetime actions. Fuel the investments, expand the margins at the same time. That's the commitment. Scott is going to take you through the full financial detail and exactly what we're committing to.

But now I want to wrap with the YETI that most investors know, which is the brand that built an iconic brand and the company that built this iconic brand. The YETI we're building now is something made for more, a company that takes that same brand and scales it repeatedly across platforms, across channels and around the world. That's the difference between being a successful brand and a compounding business. The capabilities beneath us are stronger. The playbook is clear. The opportunity is broader. The path ahead is bolder, faster and built to last. We're going after it. The next $1 billion of revenue, the next $1 billion product platform, $1 billion outside the U.S. and $1 billion plus in free cash flow. That's our plan. And I'm excited for the team to show you how.

With all that said, let's get into it. I'd like to welcome Bill to kick us off with the YETI story, where we've been, where we're going. You'll enjoy it. Thanks.

Thanks, Matt. Appreciate you. Hello, everyone. For those that I didn't meet last night, my name is Bill Neff. I've been at YETI for almost 11 years. I started in community marketing when I got here in 2015, spent time in the first 5 years in brand and community. And then about halfway through my tenure, Matt asked me to spread my wings a little bit. I took a role in product, took a role in the commercial side and worked on the European business, getting that marketing engine up and running. About 2 years ago, Matt asked me to step back into marketing. And so I've been leading marketing for a little over 2 years, which I'm truly grateful for, honored to be in this position.

So Ultimately, nothing compares to what this brand, I think, has done and ultimately what it can do. And I'm thrilled to have the chance to tell you all about it today. I believe YETI is where the brand really distinguished ourselves with this brand.

So what am I going to talk about today? So I'm going to talk about a little history, not sure how many people actually know how this thing all started. I'm going to share our philosophy, kind of, how we think. And then I'm going to give you a firsthand look at our playbook and how we run things. So how do we get here? How does a brand go from a small Driftwood Texas cooler company founded by 2 brothers in their mid-20s, Roy and Ryan Seiders, to a global cross-category leader. How do you build a consumer following that's sort of magnetize to the brand?

Well, truthfully, it just starts with a playbook. And we've been following this playbook since day 1, and it continues to serve us time and time again, community after community, country after country. But I thought I'd start today taking down a little bit of memory lane. I'm going to show you our first 30-second commercial we ever did and follow that by our latest 60-second spot we ran this spring.

[Presentation]

So we have come a long way with this brand. And when I watched the first 30-second commercial giggle, we, kind of, laugh, kind of, how old it is and everything. But the truth is the foundation that was forming around that 30-second spot, it still holds true today, and it serves kind of as a launch pad for all that's to come and all that has come since then.

But where we are today wasn't the vision of our founders. It was way more than they ever imagined. They just had this open mind and a relentless determination to make the best product out there. So Roy and Ryan, there were 2 brothers. They grew up in an entrepreneurial household. And there was a belief in that household that if something doesn't work, fix it. And if it doesn't exist, build it. So Ryan graduates from Texas A&M and he starts a fishing rod business. And Roy graduates from Texas Tech and he starts a boat business. And Roy was making these premium shallow water boats, similar to the one down on our store floor, and he wanted a cooler that would sit on the bowel of the boat that was strong enough you could stand on, so you could elevate yourself for site casting. And at the time, there was no cooler that was strong enough. They all broke, they tipped over. They didn't match his vision for what he saw in this boat he was building. And so if it doesn't exist, build it.

So Roy starts molding a cooler to kind of match his needs for this boat. But as he's doing this, his vision for building a boat business, kind of, turned to building a cooler business. And that's how YETI was born. And our founders weren't trying to build this outdoor brand. They were just laser-focused on building better gear. They were hard on their gear. They were laser-focused on better gear. And their passion and commitment to deliver that unparalleled durability of performance and design for products that didn't yet exist is still what drives this company today. But the gift that Roy and Ryan gave us and what Matt continues to drive hard today is this unlimited possibility to what YETI can be. And it's this mentality that's rooted in curiosity, craftsmanship, this consumer centricity, and we're going to talk a lot about today. Stuart is going to talk about that. But it's also this refusal to accept just good enough. We've never chased trends or marketing flash. We've asked one question over and over again, what problem needs solving.

And so now over the last 20 years, people started using our products in places we never would have guessed. And not because we told them to, but because incredible product for people who demand really great gear, they start to travel on their own. And so we've been called from the boat to the blind to the mountains and now far beyond. And we earn this trust in more communities because we meet people where they are. We listen to their needs, and we listen to their wants, and we naturally become part more of their moments. And that same person might be a hunter one weekend. He might be coaching his daughter's Lacrosse game or team the next weekend. He's commuting to work on a Monday and then he's standing around a Campfire with friends on a Friday night. We don't define that person, but we strive to make our products what they choose to carry with them across their lives.

But earning more places and more communities with more people and more moments and more geographies, it does not happen by chance. We don't just cross our fingers and hope it happens. It's 100% deliberate and it's 100% scalable. There's a method to what we do, and it's this repeatable playbook that continues to grow organically. And it's how we got from that first fishing commercial I showed to where we are now, and it's how we'll keep leveling up from here. So let's talk about our philosophy. As a brand, YETI has this unique ability to both welcome in new audiences while we go deep in the passions of those we already have. And we do this intentionally with a really strong sense of who we are. It starts how we build durability and performance in our products. It always starts with our products. But then it expands as we join one community after the next. And as a brand, we're anchored around this philosophy that balances what we call breadth and depth. And I'll tell you what that means through an analogy. The analogy makes sense to me. Hopefully, it makes sense to you.

So personally, I'm amazed by dense forests. I was just in Abercrombie State Park up in Kodiak, Alaska about a month ago. And when you walk through a forest, you notice everything above ground. You noticed the size of the trees and the trunks and the branches and the moss rolling off those branches, the canopy in the forest. What people don't think about or they don't see is this massive root system underneath it all. That's what gives the trees the foundation, the strengths and nutrients to keep growing. I -- we believe that brands work the same way. And you only see part of the picture. And as the brand grows, there could be temptation to keep adding more above ground, more stories, more ideas, more ways to get bigger. And if you're growing and you have momentum, you should try.

But sustainable growth depends on continuing to tend to the roots, the things that made the brand relevant and important in the first place. Breadth is what you see when you look all around all the ways YETI shows up in the world. Depth is the system below ground, the work we're constantly doing to make sure that as YETI grows, we remain relevant, meaningful and important to the communities that we serve. And you need both if you want to be a brand that thrives for the long term. This breadth and depth philosophy, it has -- it served us really well. It's helped us navigate uncertainty. It's helped us find more communities where a product matters. But breadth and depth, it isn't just something we sort of made up, so it looks kind of nice, and I can talk about it and put on a slide presentation. It comes from like a real human truth. Think about yourselves. When dealing with decisions that matter, people trust other people, not algorithms.

Now if you want to get into something new, you might start with a little research online. But if you're getting into golf, chances are you have a person in your own human network, that plays. And you ask them, hey, how do I -- what's the best way to get started? And if you're in the market for a new smoker, you want to get into barbecue, you call that friend that makes that crazy good rack of ribs or stays up overnight smoking a brisket. And if you want to go on a fishing trip, you ask that friend or that friend that knows a friend, who's on the water every weekend.

Marketers like to think about advertising. We love to think about advertising as marketers. And we do plenty of advertising here at YETI. But the definition of advertising is rooted in trying to interrupt the daily flow of someone to gain their attention. And again, we do loads of that. But we also work incredibly hard and would rather be part of the person's natural conversation. And we strive to be a part of that conversation because that's how trust moves, person-to-person, community to community. And exactly why we built YETI around the word of mouth that travels through every group of people. And this is the roots part I was talking about. In fact, we have 4x as many community marketers on our team than we do brand marketers. Brand marketers, they drive our awareness. We love our brand marketing team. They do the spots and all stuff.

But community marketing, it drives our relevance. You saw a little bit of it last night. The only way to really understand these consumers and their passion, you have to be a part of the communities. You have to be a part of those conversations, and we work really hard on that. So that's great, Bill. How does that all work? Okay. Well, this is our consumer model. And we built it in an extremely deliberate way. And inside every community, there's someone everyone trusts. We talk a lot about finding trust through trusted sources. You heard Joe say it unprompted last night. We talk about, we say those words, trust through trusted sources. And this may be a hunting guide, it may be a world-class angler, it may be a pro-pitmaster.

And we find these people, we call them the elites, and we explore our relevance with them. And this is where we start to earn the trust. And if you earn the trust of the elites, credibility naturally starts to extend outward to those around them and a broader audience. And so it cascades from the elites to this group we call the enthusiasts. And enthusiasts are people who live and breathe and activity. We all know these people in our networks. It might be you that are just eaten up with a pursuit and any free time they have is spent on it and they're talking about it all the time and you get bored with them talking about it. But this is where energy, when those 2 groups come together, it really starts to build. And as these groups start advocating for YETI, word of mouth naturally moves down to even a broader group, we call the participants. And these are the ones that maybe dream about these activities more than they have time to actually do them. I'm personally a participant in 4 or 5 of the communities that we work with.

And once these groups are buzzing, the broadest group is the spectators. And they're just feeling the energy and they just want to be a part of it. And at each step, we're listening and we're learning how people are using our products. And as we're taking in all this engagement, we sometimes notice people using our products we never thought would use our products or we noticed they're using it in ways we never would have expected. Other times, communities actually come to us with an opportunity to build something together. Either way, open doors, open minds, and we earn the right to grow because we always start with finding trust. In fact, 91% of our YETI owners say YETI is a brand that they trust, and that's really important to us because we work really hard on that.

I'll give you an example of this happening. So this is probably the first one. So OARS. OARS is an expedition rafting company known for their extended trips down the Grand Canyon. And there's a passionate community of whitewater rafters that YETI discovered were using our coolers on their expeditions. Roy and Ryan, they weren't whitewater people they didn't design with whitewater in mind. I'm not even sure they've been on a whitewater trip. And it would have been easy for them, just a high 5, that's cool. They're using our coolers. We're a Hunt-Fish brand, whatever. And I think brands often get scared to go outside of what they think they are in fear of losing their core. So it took courage for Roy and Ryan to be confident in the foundations in Hunt and Fish to go see what was up. And they discovered a real challenge.

The coolers had the performance, but they didn't fit into the rafts really well. So YETI and the team back in Austin, they built the YETI 110. And there's a cooler now that fits into all major raft frames. And that was a real moment for YETI. This little brand from Driftwood kept an open mind and stepped into a new community without the fear of losing their core. And the same thing happened in barbecue. When we learned Pitmasters we were using our product to keep the meat warm. I mean that first commercial all talked about was keeping things cold. This was an aha moment. But that barbecue community ultimately took us to a broader culinary because while the pursuits are different, the product need and the passion behind it was all the same.

And so that story about OARS, that was, started small, and that was just one example way back when, but it points to something much bigger. Our relevance extends well past where we are today. Consumers spend trillions of dollars across pursuits that matter to YETI, outdoor rec, sports and home. And a meaningful piece of that is generally ours to go after, categories where we have the real right to play, not just an assumption that we can show up. And we've already claimed a solid chunk of it, sure. But our audiences are giving us permission to go where we are not. And it adds up to an opportunity to roughly double the footprint we even hold today. And this pattern we see repeating itself because for the last 20 years, it's repeated itself over and over and over again. Communities keep pulling us towards real addressable opportunity because when you show up and you listen, people will show you the rest.

And so this is the playbook. This is what we run, and this is what we think about all the time. And it's important to note that none of what I talk about starts with marketing. It starts with making products that perform. And that earns the trust, the first step once you make the product by doing what we say and building things that last. And once you have the trust, we position ourselves to go earn credibility through broader real-world performance and proof. And from credibility, then we move to presence. We start showing up across the communities where moments of passion run deep. And then from there, we inspire. We're a storytelling brand. We tell stories of people using our product and their own adventures.

And finally, we connect and we put all these pieces in front of the right audiences at the right time. And that's the playbook that fuels the growth. Every new community makes our product better. Every better product makes gains more trust for our community. And the cycle just repeats itself, build product, earn trust, establish the credibility, grow our presence, drive to inspire and then relentlessly connect. And so we'll zoom in on each one of those and what each one of those steps mean for us, and we'll start with trust. And we earn trust in a few different ways. But the main way is by working with our ambassadors. And we look for people who are professionals in their pursuit, and they use our product every day. You met 4 of them last night. And these people are more than just self-declared influencers online. These people have earned the respect of the communities they're a part of with deep long-term relationships, kind of, already built in.

And if our product works for them, when they need it, we know we have something competitive. We know we can move forward. Our ambassadors make our products better. They create that trust I was talking about, but maybe most importantly, they help us navigate the community. They bring the culture and product relevance we need to effectively go broaden our reach. And this network has a global following. When we entered the U.K., we just didn't guess on who we should go talk to. We asked our ambassador network. We asked Jimmy Chin, who's a world-renowned alpinist and filmmaker, hey, who should we talk to in the U.K. in the Climate, you should talk to Leo Houlding. Okay, let's go talk to Leo. He's an ambassador of ours now helping us in the U.K.

When we thought we had something in the barbecue and culinary space, we asked Billy Durney. And if you're in New York, you may be eating at Hometown Bar-B-Que or Red Hook Tavern. Billy, who should we talk to in that space? You need to go talk to Lee Tiernan. Okay. Lee Tiernan is now an ambassador of ours, and he uses our product every day in helping us navigate the U.K.

And this connectivity between our ambassadors ensure we're never entering a market from scratch, but with credibility already built in. And it's how we'll establish YETI brand internationally much faster than we could just sort of guessing on our own. So once you have the trust, and we move to credibility, and we choose where we play carefully. Currently, our 356 partners span the globe, each selected because they put us somewhere. We have that established trust and they provide the room for growth.

And these are hunting lodges in Utah, all the way to newer partners like the NWSL, which is helping us establish credibility in women's soccer and sport to Red Bull Racing to the YETI Yard at Wrigley Field or older partners like Blackberry Mountain or Captains For Clean Water, which is an organization that's working hard on restoring the Everglades in Florida. These are 5 different worlds, one thing in common. Our product living there for a reason. And we're not buying reach. We're building on the trust that's already real and establishing associations that will endure.

So once you have those 2, trust and credibility, then we feel like we can step in. So it's presence. That's our third step. And it's the simplest one to explain. We show up in person everywhere our communities already are. And when I say show up, I mean it literally. You saw kind of what it was like, really what we do last night. You can't learn a community from behind a desk or a screen. We put products in field, we show up at the events and we listen. We do roughly 450 global annual events a year. We have 8,000 specialty doors roughly that not only help drive our commercial engine, but these are the shops our enthusiasts and participants shop in. They help us understand our place in their lives and which products are resonating with that group of people. And that's not marketing reach. That's just us being there in person, speaking to our people.

And growth hasn't pulled us away from where we started. It's actually given us the ability to invest in it even more, whether it's the YETI Open at Table Rock Lake, if you're in Branson next week, come see us. Places like Gearhead Outfitters, T&C Surf in Honolulu are larger partners like the World Surf League. These are communities that put our products to the test long before anyone else is watching, and we still show up for them every day.

So once you have those 3, that's kind of our third-party advocation engine. We inspire. We tell stories. And when you have those 3 stories pop up everywhere. And we look for stories that inspire us because chances are, they'll inspire others, too. We're motivating them, whether it's to get back to something they stopped doing 5 years ago that they had brought so much joy their life or maybe it's a leap towards something they always dreamed about doing, but always kind of a little scared to do or even just break up their daily routines. And none of that falls out of a spec sheet, and these stories are born in moments worth living. And it's our job to give them the amplification that they deserve with films, campaigns, product stories, experiences and so much more.

And so once we have those, then it's time for us to start connecting. And it's where it all becomes a package, the film, the campaigns, the data, the media, the product stories working as one system instead of separate efforts. Our Four Letters campaign that you saw drove a 15-point lift in YETI consideration. That's because the campaign was about them. They saw themselves in that campaign. And that consideration lift only compounds an already really strong consideration to conversion funnel that we have. Our own data tells us exactly who to reach next, real consumers with real followings who are already talking about YETI in their own feeds. And every product story we tell is fed by everything the first 4 steps taught us. And it's exciting that we're reaching new people, but it's more exciting to me that people are starting to understand what YETI stands for and they're choosing it.

And this sense of belonging doesn't stop at borders. As we've introduced YETI into new markets, people connect for the brand for the exact same reasons they do here at home. And it's because humans are humans and connection travels. People are choosing to participate in this brand because what we are building is bigger than any one product, and it's bigger than any one pursuit. And whether you're in Munich or Tokyo or Australia or Argentina or here in Austin, Texas, our values translate. The language changes, the geography changes, but people connect because the wild is not a place. Built for the wild isn't a product for a place out there. The wild is the spirit inside us all. It's pushing us to do more, to be better versions of ourselves, to go participate in life. Our products, our stories are here to feed that, more passion, more obsession, more unmet needs met, more people what we like to call living their wild life.

So I know I've said this numerous times, but product and brand are inextricably linked. Everything I talked about today, the trust, the credibility, the storytelling, the communities only exist because of the products we make. And this brand has more than earned the room to run further than it already has. And I know this because I'm on the other end of the phone calls, like they're calling us. These audience are calling us.

And so with that, I'm honored to hand it over to 2 people who make my life in marketing much easier in the work that we do. Here's Hannah Mara and Layne Rigney to talk about the innovation engine that fuels everything. Thank you.

All right. Thank you, Bill. It was a pleasure to meet several of you last night. For those who of you I did not get to meet, my name is Hannah Mara, and I've had the absolute privilege of working at YETI for 6 years across multiple aspects of our product organization and shaping the innovation that has fueled our growth. And as I stand here Today, I'm incredibly excited by the opportunity in front of us. And it's not only in the products that we currently have, but in the innovations categories and consumer experiences that will define the next chapter at YETI.

So I'm here to talk about how our growth is powered by a repeatable innovation engine. And this is an area where we have evolved the most in the last 5 years. And today, I'll talk about how we determine where to play and our product philosophy, how we've built and implemented a more efficient, more capable innovation engine and why we have real confidence in the next decade of growth, including in our U.S. Drinkware business.

So as Bill said, at YETI, we don't start with the product in mind. We start with the problem to solve, whether it's a zipper that snags on your way into work, a latch that fails miles from the trailhead or ice that's melted before half time. We pay close attention to how and where consumers are already using our products and what other unmet needs exist. And frankly, that's our invitation to step in. And we lean on our partners and our ambassadors, people who have spent tens of thousands of hours in the field to tell us what great looks like. Their standards become our standards. And we listen to where we can surround more aspects of a consumer's life.

And that's how we expand, solving problems in the spaces consumers already trust us and identifying where we can build something meaningfully better. A good example, which you heard several times yesterday is the Camino bag. YETI solved just a simple but overlooked consumer challenge. People needed a better way to carry all the gear that comes with life outdoors. So we designed a bag that could handle wet, dirty and demanding environments while keeping essentials protected, organized and easily accessible. And so what looked like a beach tote was built with the durability, the structure and the waterproof performance of YETI Gear. And people quickly found endless uses for it from hauling sandy wet suits and muddy gear to carrying sports equipment, chopped wood and everyday halls.

And that enthusiasm revealed a much bigger opportunity. What started as a single product evolved into a family of products with multiple sizes, additional features and new zippred options. And so the Camino became more than a bag. It became another example of how YETI turns a clear consumer need into a platform for growth. An important note here, too, is that building something meaningfully better means refusing to accept trade-offs. For example, a product that is durable but lacks thoughtful design, one that performs well but isn't built to last. one that looks great, but doesn't solve the problem. So we believe consumers should not have to choose between durability, performance and design. They deserve all 3, and that's where we see opportunity to bring the quality and the functionality that YETI delivers on and that consumers value. Because when you give people what they deserve and you exceed their expectations, they notice and they become your advocates. 95% of our U.S. owners would recommend YETI to a friend or family member. It's been over 95% for over a decade.

Even through incredible growth, we continue to deliver on our product promise. And we take that trust very seriously. It's why we're selective about what we develop. And this is not about slapping the YETI brand on more product. Every expansion should feel inevitable. When consumers see a new YETI product, we want their reaction to be one of excitement and of course, YETI makes that. And it muscles up to our standards to earn the YETI name.

So how do we decide when to say yes, no, or not yet. And it's really a blend of art and science guided by 3 questions. So the first, do we have a distinct point of view? This means do we have a differentiated point of view on materials, construction and design. And our Panga Submersible Duffle is a great example here. Most bags are stitched, which means every needle hole is a chance for water to get in. Ours are welded the same way a white water raft is built. And that's not a small tweak. That is a wholly different approach to offer incredible protection. Second, is it a meaningful opportunity? Does the product stay true to who we are while expanding where we show up? And does it solve a real problem our communities face or just one dreamed up on a whiteboard? And do we have proof and a data-driven view of how the product will perform. And sports is a great example. It's a natural place for YETI to show up because think about what our products are built for, lasting season after season, holding up to sideline abuse and working when the wind is on the line. The opportunity is huge, and we're uniquely positioned to capture it.

And third is now the right time. We don't often say no, but you will hear us say not now. Our barware journey is a great example. We started with the low ball and the wine tumbler, earning a place in consumers' cocktail rituals. Once we establish that credibility, we expanded beyond the individual vessel to cocktail shakers, pictures like the ones in front of you, beverage buckets and wine chillers. And it really expanded YETI's role from the first pour to the last strength. These questions represent the discipline and the strength in our product portfolio strategy.

So before I walk you through our platform evolution, let me take a minute to actually show you some of the incredible products and platforms I'll be talking about.

[Presentation]

So we don't just add more items to our portfolio. We intentionally build products into families, families into platforms, always protecting the trust we've earned along the way. So first, we enter solving a consumer problem with an iconic product built on real durability, performance and design. Next, we establish, watching and listening where our product gets pulled into new communities and new uses. And then we expand, thoughtfully extending the platform to serve more occasions. Let me give you an example. Our ICE buckets, which you saw last night, are incredible at keeping things cold. And once people witness what they can do, they let their imagination run wild.

We noticed people using them to keep Carne Asada warm, using them for sous vide cooking and even creating massive nachos for gatherings. And that led us to think beyond the bucket and grow the platform into insulated bowls, delivering the same quality and thermal performance in products purposely designed for those uses. And you'll see this pattern over and over. It's what builds a whole ecosystem of complementary products around communities or occasions, and it's deepening our presence where we already have trust and then expanding into full platforms and new environments.

And our commercial capabilities, as you'll hear about later, from new aisles to new channels, new markets are how we deliver on that demand once we've discovered it. And you can see this evolution play out across our history. We started with one iconic product, the Tundra 45. As consumers got familiar with its durability, performance and design, we saw the use cases brought into places we never expected, but made perfect sense. In Equestrian, we saw people were using the cooler to ice down horses' legs after long events. We also saw barbecue Pitmasters resting their briskets in them like Bill talked about. And in the Red Bull racing pit lane, teams were putting dry ice to keep the engine cool during a race. These foundational products gave a base from which to grow. And today, that's evolved into additional products from Hard Coolers to Soft Coolers and Drinkware into full product families and beyond.

And because we stayed so connected to how our consumers were using our products, we have the insights to plan years of expansion ahead. And with 20 years under our belt, we've continued building scalable platforms that solve a broader set of needs while staying true to what made us YETI in the first place.

So now the engine. Our innovation flywheel is simple. We identify patterns in how consumers behave. We translate them into well-designed products with broad relevance and then we scale across new use cases. And over the last several years, we've significantly transformed the way YETI innovates. It is no longer a series of individual launches over a period of time. It's become a repeatable capability that gets the right products to market at pace. And every product starts long before it's built. It starts with many diverse inputs. We're watching where our consumers are already pulling us, listening to our ambassador network and staying close to how consumer behavior is evolving. And beyond our communities, we're closely monitoring macro behavioral trends across industries and across the world. And the signals we pick up don't stay scattered. We put them through repeatable pattern recognition, weighing and testing against judgment until thousands of noisy individual signals become a handful of actionable insights. And those insights are what build the road map years out, which categories to enter next, which platforms to deepen and in what order.

And once we determine what to build based on our insights, we feed that into our engine that delivers with accuracy, speed and productivity. An idea moves from the inside to shelf across 5 steps of our development cycle, and each step has been methodically built to deliver results. So first, tech and material sourcing. We invest in R&D and advanced materials development and have built a strong, diverse global network of suppliers. When outside technology or materials can accelerate our progress, we move fast to acquire it rather than build from scratch. That's exactly what Mystery Ranch and Helimix gave us.

Second, lockstep design and engineering. Through talent development and acquisition, we've built deep in-house expertise and a team of industry-leading designers. They work shoulder to shoulder with our incredible engineers and the people who make our gear. A well-coordinated global operating model leads to faster iteration and faster results. Third, rapid sampling and prototyping. So take our innovation centers domestically and internationally, quickly sampling and prototyping product designs and validating them in one building saves immense time and cost. Fourth, on-site quality testing. So global innovation hubs and teams embedded in your manufacturing give us real-time feedback. So for example, the instant a component or a part comes off of a tool, it goes straight into quality verification. It's a quick turnaround for the tooling or the processing adjustments we need to make.

And fifth, manufacturing at scale. And this is where speed becomes scale. Not only are we moving more quickly, but with dual and triple sourcing, we're able to diversify our manufacturing base and be more responsive to changing conditions. And our product design and development process isn't running out of one building. It's active right now across multiple locations in the United States, China and Southeast Asia. We put our talent close to the partners and the factories that make our gear. So while one region finishes work, another is just starting, creating a 24-hour cycle of rapid iteration, constant progression and efficiency. So here's a short film we put together to show what this looks like in action.

[Presentation]

So the engine is able to run continuously because we put it exactly where it needs to be. And one example here is color. By putting teams to color our suppliers, we've cut in half, allowing for more flexibility and capability across Home & Hydration. And everything you just heard about our process and our innovation centers is enabling us to reduce our new product time to market by 1/3.

So what are the tangible outcomes? And it's a balance between 2 things: product vitality and product longevity. 20% of our 2025 revenue came from products launched in the prior 24 months. That's vitality and proof that the innovation engine is working right now. And 60% of the same 2025 revenue came from legacy products that launched in 2021 or earlier. That's longevity. Proof these aren't fads, they're products people keep buying year after year. And we need both, a business built entirely on what's new is fragile, a business built entirely on what's old is stale. But this is what it looks like to have real momentum without losing what's durable underneath it.

And so innovation is what turns something people never gave a second thought to into something they actively seek out. So let's talk about the opportunity innovation opens. As Matt shared, our innovation engine is a key element of building the next billion. It helps people put more products into more moments across consumers' lifetimes. And there is significant runway within the categories where we already play. So today, we participate in the $121 billion global premium market. In the U.S., that's $43 billion premium market, and YETI represents just 2% of that pie.

These are massive growing markets. And as we continue to expand our platforms, we have meaningful white space to capture. And that gives us decades of potential to seize within our existing categories alone. And across the portfolio, we see a path to our next $1 billion in sales by 2030, growth that comes from both category and geography. And it's even more balanced, diversified and resilient business than the one we have today. And you can see it stacked right here, Home & Hydration, Gear & Equipment and Bags & Soft Coolers, each one contributing, none of it riding on a single category. Bags & Soft Coolers alone has a clear path to becoming our next $1 billion category, and we're accelerating through innovation and sustaining balanced growth.

And one of our best -- some of our best consumers actually give us a powerful proof point of what ownership can become. Starting with our existing consumers, the top quartile of YETI consumers own an average of 14 items across Drinkware, Bags and Hard & Soft Coolers. The second quartile is on the exact same path just earlier in it. And the biggest difference between the 2 is time. And as consumers stay with YETI, they discover new products and use cases and their share of wallet builds. So if we move just 10% of U.S. YETI owners up 1 quartile, that's $1.2 billion of incremental opportunity.

And now let's look at new consumers. Roughly 60 million U.S. households don't own YETI today, but look like the consumers who do, reach just 10% of them with YETI product, a drinkware item, a bag, soft cooler or hard cooler, and that's approximately $1 billion of incremental opportunity.

So now that we see the engine that we've built and the opportunity ahead, here's what they meet, our platforms. And the 3 platforms in our portfolio are Gear & Equipment, Home & Hydration and Bags & Soft Coolers. So we'll start with Gear & Equipment. This includes our hard coolers, cases and storage and outdoor living products. It's all about helping people perform where and when it matters most. And as YETI's first platform, this is where we earn credibility and shape the brand. We started with the Tundra 45 cooler and built the best on the market. You saw the videos today. They're bear-proof, able to perform incredible feet of strength, survive in the harshest environments and never stop delivering on the durability, performance and design we've been known for since day 1.

So 20 years later, the Tundra 45 continues to be one of our leading coolers and serves as a foundation for not only our expanded hard cooler line, but also every category we have entered. The early evolution of the Tundra was simply adding a broader range of sizes and price points. Then we moved into products people could use alongside the cooler and later added the Roadie cooler line for consumers who wanted more portability and maneuverability. And as we expanded hard coolers, we noticed how our consumers were using them beyond keeping things cold, but rather as organization and protection for their sensitive equipment such as cameras, scopes and drones.

And that called us into cases and storage, starting with the GoBox 30. And today, you can find it holding everything from climbing and mountaineering equipment to emergency kits. We've quickly expanded GoBox into additional formats and launched in phone cases earlier this month. And we're not stopping anytime soon. We have exciting innovation in the pipeline that we'll be giving you a sneak peek of later, and I highly encourage all of you to take a look. So Gear & Equipment has strong tailwinds behind it, and they show up in a few ways. More people are getting outdoors with 30 million new outdoor participants since 2019. And people are spending more on experiences. Experiences make up 43% more of consumers' budgets than they did in 2000. And they're spending more on Gear that enables them to get outside and live their passions. Spending on Gear for sports and recreation is up 13% over the last few years. And Gear & Equipment is showing up in even more moments across a wider variety of occasions, especially when it matters most, whether it's rolling coolers that make the navigating the beach or the Baldface easier, smaller formats that are more portable to move along with you, weather-proof storage that helps protect a GPS in the wild or a wallet on the boat and camp chairs and blankets are giving people more comfort and durability as they gather around a bonfire or watch a concert in the park.

And those are just a few examples. Every one of those moments is a new reason to own a YETI, a new door into a category we're beginning to scale. And once we move into the category, we can continue to innovate and explore other areas we can serve. You'll see the same pattern repeat as we move into Home & Hydration and Bags & Soft Coolers.

So let's look at the growth for Gear & Equipment. This is an $18 billion global premium market where we hold about a 2% share today. We built this category from the original Tundra 45 to over 18 hard coolers covering the full range of personal, consumer and commercial formats. Our Power Cooler will bring an exciting innovation to YETI and to the entire category next year. We've paired our strength in design and materials with our deep connection to our communities to expand the GoBox platform. That has grown to 7 formats this week, 11 by year-end and 15 by the end of next year. Our award-winning Trailhead Camp Chair has evolved from a single product to a growing platform joined by our beach chair last year, our field chair earlier this year and our stadium chair next year.

Our innovation engine is on fire, and we are excited to see it engage existing consumers and reach new consumers. So as a result, we expect this platform to grow from $360 million in 2025 to up to $600 million by 2030. That's low double-digit growth over the next 5 years, much higher than the 5% pace of the overall global category.

So let's move to Home & Hydration. This platform is about expanding to be part of more moments in a consumer's life through new occasions, new materials and new formats. Now think about how many products consumers use in any given day and where YETI already shows up. So for example, it's fueling for a workout with our shaker bottles and jugs. It's entertaining at home with our bowls and pictures, and it's reaching for our stackable cups like the ones you're using today as the ultimate utility driver for coffee to cocktails and everything in between. And those are just to name a few. We're solving for more needs for consumers who already trust us and for those who have yet to discover YETI.

So in 2014, we started with 2 stainless steel styles, the YETI Rambler 20 oz and 30 oz Tumblers. That original 20-ounce tumblers is still one of our longest-running products, and it's up double digits year-over-year. Then we watch how our consumers were using our products. We saw people using the 10 oz Lowball, not just for drinks, but also for keeping chili hot or ice cream cold. And that pulled us into food storage with insulated food jars. That's one kind of expansion, one product pointing us to a new application.

But we also identified a different kind of opportunity, which was building complete workflows around occasions. And coffee is a great example. We started with the Rambler mug, then we expanded into espresso and coffee cups. And from there, we moved into brewing with the French Press, solving for over-brewed lukewarm coffee, whether at home or outdoors. And later, we expanded ceramic lining across our core coffee assortment. And so what became as a single cup evolved into an integrated system, allowing us to improve the entire coffee experience.

So here's what that adds up to. Instead of focusing a category on a single product, we play in several categories with several products. Diversification is immensely powerful, and it's exactly what keeps this platform growing. And the tailwinds behind the expansion of this platform are strong. So 77% of U.S. adults resolved to drink more water this year. That's the #1 health revolution across the country. 65% of global consumers now carry a reusable bottle, and 127 countries now restrict single-use plastics, contributing to the growth of the reusable category. All these structural consumer behavior shifts are supporting our growth trajectory, and that's just in Hydration alone.

So here's an important point. This is not a single-product platform. People do not use one vessel for every need. Their coffee routine is different from their commute. Their desk is different from the gym. The sideline is different from the backyard. Individual hydration is different from serving and hosting a group. So if we look at the opportunity that even a single additional drinkware item creates, the math is compelling. Selling just one more drinkware item to our existing customers is worth $2.1 billion. Selling one more drinkware item to our new consumers who look like our existing base is just worth another $2.4 billion. That's $4.5 billion sitting inside a single purchase.

And that's the power of our model. A single product gives us a foothold, but the relationship grows over time as consumers find more reasons to bring YETI into their day, into their routines and into their communities. They come back for the next use case, and they bring others with them. And that is how one purchase becomes a pathway to many more. And how we make this happen is both in driving awareness of our brand and the full extent of our portfolio as well as getting the right product in the right place with the right stories as Stuart, David and Mitch will cover.

All right. So now let's look at what's driving growth over the next several years. In Home & Hydration, our strategy is to build on a strong foundation, continue to evolve the platform to meet the changing needs of global consumers. And that means continuing to lead in everyday hydration from commuting to daily routines while pushing deeper into sports on the sidelines. And at the same time, we are expanding YETI into and around the home through products that earn their place in the kitchen, around the table or wherever people gather.

Our new tableware, food and cookware products are a thoughtful extension of the YETI platform, opening new opportunities where we can bring a distinct point of view. And across platforms, we have expanded customization capabilities in both digital and retail experiences, enabling greater consumer self-expression and deeper connection to the brand. And these capabilities, they also create new opportunities to engage consumers through strategic partnerships and broader distribution channels, and they drive incremental demand and repeat purchases.

And while we've built a leadership position, we still hold a relatively small share of a very large global market. And that gives us confidence in the runway ahead. Our global premium drinkware and homeware TAM is $50 billion, and we hold just 2% of it. We've expanded this platform from $425 million in 2018 to $1.1 billion in 2025. We expect $1.5 billion by 2030, a mid-single-digit growth rate ahead of the pace of the global category.

And finally, our third platform, Bags & Soft Coolers. Bags & Soft Coolers Bags just demonstrates what happens when we combine how consumers behave, real product innovation and brand credibility. This platform is one of our most exciting long-term opportunities. Moving from outdoors to everyday travel took more than a good product. It took a brand people already trust, an audience that's grown far past where we started and product capabilities that could keep pace. Bags & Soft Coolers sit right at the intersection of all 3, which is why we believe we've only scratched the surface here. We started with Soft Coolers and made the best in the market with our Hopper Soft Cooler that could keep ice for days. Then we watched how people use them in daily routines, such as commutes heading into work, parents packing for field trips.

Following our consumer signals, we then translated the Hopper into more everyday products for more consumers by introducing the day trip line. Now, what Hopper is to everyday coolers, pangas is to bags. We started with the iconic product that was waterproof and fully submersible and then translated that into everyday travel and in addition to our pursuit focus. And it's the same pattern we keep calling out. We start with the iconic product that is the pinnacle in the category. We follow the consumer's lead, and we expand thoughtfully.

So now I'm going to turn it over to Layne to take you through why we believe that Bags & Soft Coolers themselves are a $1 billion opportunity.

Good morning, everyone, and thank you, Hannah. I'm Layne Rigney. I'm excited to get a chance to talk to you for a few minutes about YETI's growing Bags portfolio. Prior to joining YETI in January 2024, I spent the better part of 2 decades in the bag space. Most recently, I had the privilege of leading one of the world's better known outdoor bags brands. Someone in my family once told me, you should only make a decision in your life that's big and meaningful when it feels like an imperative, something you absolutely had to do. And after looking deeply at YETI's place in the market and its readiness to go be a player in this space and then after meeting the leadership team, many of whom you'll get a chance to meet or hear from today, that was it for me. That was the imperative. I knew I felt it. And I had to join to lead this opportunity for YETI and this team. So let's dive into what that next phase looks like.

So Bags & Soft Coolers are built on a trusted durable foundation, and they have the inherent advantage of preexisting demand. A few years ago, when we were developing our bag strategy, we tested that demand, and we found that 90% of existing YETI consumers were interested in a bag from YETI. That's a privilege I've never had in my career, and our team is focused on building a portfolio of products that closes this gap. Because when we do, the impact is significant. Every 10% of demand we capture is valued at $500 million in revenue. Those are big steps on our path to the next $1 billion. Importantly, consumers don't own just one bag or soft cooler. If you want proof of that, go home, inventory your own closets. And frankly, I watched a lot of you shop last night and you added to your inventory last night when you were down the store.

For me, maybe it's an occupational hazard, but my home has more bags in it, more soft coolers in it than I would do drinkware. And each one of those products I acquired despite an employee discount at a higher ASP than any of the drinkware products we have in our house. So getting Bags & Soft Coolers to our next $1 billion platform is within reach. It only requires 1 in 5 YETI customers to convert, again, when 90% of them say they already will.

Beyond our own universe of YETI consumers, this platform is a door to an entirely new consumer for us, especially younger consumers and female consumers, both of whom have high category purchase intent. And it isn't just a domestic story. Over half of the soft cooler and bag purchases globally are concentrated in Europe and Asia, which is exactly where our next international opportunity accelerates from here.

Now let's zoom out and take a look at the market size. Bags & Soft Coolers represent a $68 billion global market, $53 billion in the global premium market, $20 billion in the U.S. premium market. And today, YETI has less than 1% share, giving us significant room to grow. Not only is the market attractive and accessible, but participation trends are strong, and they're driving more consumers towards our growing portfolio. More people are active, more people are traveling and spending on travel continues to grow. All of these are signals of more moments and more occasions for this platform to serve.

In 2017, we entered the bag category with Panga. You've heard about that earlier today. That was a product built because rafters and anglers needed something fully submersible and we had the capability to make it. That's one product for one specific use case. But it also proved that we can make great bags and that when we did, people noticed. Today, we're well on our way to becoming an established player across the whole platform. We've built out the brand. We've expanded beyond those legacy pursuits. We've developed real commercial channels, added dedicated innovation centers, and we continue to wake up every day focused on scaling the platform by solving problems and telling the stories that only YETI can tell.

We went from serving -- we went from solving one problem for one community to building a category presence across all of them. That 90% number, the number of people who say they want a YETI bag, isn't us pushing our way in. It's consumers opening the door and inviting us in, just as they have with every other platform where we've built a business. So where are we today? This has been a multiyear journey, and the results have been significant. We've grown Bags & Soft Coolers from $130 million in 2018 to $390 million today. That's a 17% compound annual growth rate. We built the strategy in 2023. In 2024, we invested in accelerated innovation, including our acquisition of Mystery Ranch.

In 2025, we launched more Bags & Soft Coolers than in any year prior. And in '26, we're moving even faster, launching core reinforcing products like Skala, styles that are new to YETI like the Ranchero Crossbody, expanding our day trip line into larger and smaller formats like snack occasions for the whole family. And earlier this summer, we opened our new soft goods innovation center in Vietnam. We're past the point of hoping for success. We're a healthy growing business, and we're pushing for more.

Now we're building out our bags portfolio with the know-how to do it right. We're leveraging everything we've already learned from soft coolers, and we have the focus, capabilities and route to market to be successful. Let's talk about those 3 things individually. First, focus. Not only do we have a strategy, but we have the best team to execute it. It isn't a side project. We've built a team with deep, dedicated expertise in the category and in this platform specifically. They understand the communities, the pursuits and the use cases we're designing for better than anyone.

Next, capabilities. We've invested in in-house innovation centers in Denver, Bozeman, Vietnam. All of them are dedicated to soft goods, and they keep iteration and manufacturing turnaround tight. This gives us speed and cost savings.

And finally, our routes to market. YETI products are already sold where most consumers buy bags today. And in so many cases, these are channels we've already built or we're building now. This is readiness whose nucleus is already well established and primed for expansion. So it's time to talk about what brings the opportunity to life, which is product. We organized the pipeline around these 3 segments. They're really easy to understand every day. It's just what it sounds like. These are products for work, play, campus, around town and beyond. Many, if not most, of you carried something from this category today.

Next is travel, products for adventure, leisure, commute and business. Nothing drives myself or my team more crazy than the idea of people heading into their version of the wild by packing their YETI products into someone else's bags. We've set our sights clearly on making sure this doesn't happen.

Finally, Pursuit, products for fish, hunt, hike, mountaineering, sport and beyond. This is where we earned our stripes initially with the Panga, and it's still our proof point today. If it's proven by mountaineers on the highest peaks, anglers offshore, hunters in the back country, it will work for anything on the list. But the real opportunity in front of us is every day in travel. A bag, whether that's a soft cooler, a backpack or a cross-body bag goes with you everywhere every day. And bags immediately open the aperture for more YETI products to be carried with them. Together, these 3 segments serve more occasions, reach more consumers and give our existing consumers even more reasons to come back.

But beyond segmentation, it's innovation that separates us. And in order to understand what makes YETI different, I want to anchor everybody on what makes most of the others the same. Here's the model that most brands use. Product designers, developers, quality folks, they're living at desks, thousands of miles away and removed from where the products are actually being made. They take as many as 2 to 4, and I'm saying many jokingly, as many as 4 trips a year to a supplier. And what they do is they embed in these sample rooms for 1-week sprints. You get the math on that. They're doing 2 to 4 weeks period per year actually building product. And they're being steered towards the known and they're being steered towards the easy. That isn't building, it's shopping.

Locating in Vietnam gives our team 3 key things. First is innovation. We decide how to solve our customers' problems in the best way we can. We aren't led to those solutions by suppliers who are looking to fill capacity. We stay really close to the process so we can iterate until we get it right. The next thing it gives us is speed. That same proximity, it allows us to move faster. Ideas go from concept to testing to production without samples and patterns traveling back and forth across the globe. If there's a problem, we're on the factory floor on the same day it's occurred, and we're solving the problem. We take months out of the process by doing that, and we put that time back into creating value.

And finally, cost. Our Vietnam innovation center is staffed by true product builders. And importantly, as builders, when our sourcing team walks into a factory, every cards face up. We know how much time it takes to build a product. We know how much fabric it takes. We've nominated every material in that product, and we work shoulder to shoulder every day in the places where that product is built. This -- that's what turns the cards face up and allows us to go source with the best of them. And again, this is the difference between shopping for a product and making a product. And I can tell you from 20 years' experience in this category, it's absolutely not the norm. This is the investment we've made and it's going to give us our winning edge.

None of this works without the commercial engine behind it. The strength of that commercial engine at YETI is what convinced me we could build a better bag brand, and we could do it faster than anyone else. It's why I joined YETI. And in my 2.5 years here building this foundation, I'm more convinced of this truth now than I am since I joined. Brand and marketing feeds top of the funnel awareness. Our storytellers at YETI are unequaled at creating emotion. And our community teams, they're masters at building to steal Bill's words, building trust through trusted sources. And the commercial team places Bags & Soft Coolers where consumers already shop with a strong wholesale roster of the best retailers in the space and real discovery and conversion right on yeti.com.

Plus, internationally, this product gives us -- this platform gives us an easier way in. In a lot of these new markets, bags are already more adopted than in any other category we sell. And I want to dwell on this point for a moment, and I want to talk about -- what do I want to talk about? When you take innovative product that solves problems for customers, you combine it with trust and emotional connection and you put it into distribution around the world that reinforces its belongings, that's the formula.

A few brands can maybe do one of these things. Very, very few brands can do all 3 of them. YETI is one of them. That's rarefied air already if it's not the rarest air. But here's what separates us. And I get to turn this into the game show portion of today's Investor Day. Name one brand besides YETI, who can do all 3 of those things credibly with hunters, anglers, hikers, alponists, surfers, PGA golfers, Millennium Michelin Chefs, world-renowned Pitmasters, Rodeo riders, Rugby players and on and on and on. You can find one, you can name one, find me during the break. Let me know, I'd love to hear the answer. And if you're watching online, you can e-mail me, but spoiler alert, you won't be able to name one.

So I've shown you the expertise we have in-house for design, shown you how we're segmenting the line and where we're taking the Soft Coolers & Bags category. And I've shown you how we're investing in Vietnam as part of our innovation cycle. That's how we're going to capture that 90% of latent demand and build our next $1 billion platform. Brought together, here's the trajectory. We expect to nearly double this business by 2030, with Bags & Soft Coolers growing roughly equally, landing close to a 50-50 split by the end of the decade. And it will be a global play with 1/3 of that growth coming from international markets alone.

So let's wrap up the product and innovation section that Hannah started with this. Our strategy is methodical and innovation is our differentiator, creating opportunities for efficiency and growth, not just in Bags & Soft Coolers, but across all of our product platforms. That innovation engine that allowed us to build upon our iconic products into scaled platforms across all product categories, we're bringing new formats, closures, materials and features to market.

This diversification is our strength, and we're expanding across multiple vectors to win, new SKUs, new occasions, new consumers, new markets. Bags & Soft Coolers is an example of how these strengths are fueling our next chapter of growth. They prove that consumers can accept premium pricing when they're given a premium product. They earn that advocacy through real-world credibility and every new offering that we bring to the consumer has to earn its right to exist.

Technical Hunting Bag, which is a little foreshadowing to where the product road map might go, it's a great example. It may never be a major revenue driver for us, but it's exactly the kind of halo product that makes it worthy of us -- makes us worthy of playing in the category at all. And it's why we believe this will be our next $1 billion platform.

So before we jump into commercialization, how does everyone feel about a break? When we get back, Stuart is going to walk you through YETI's commercial engine. I believe you have 10 minutes to stretch your legs and be back in your seats. So thanks, everyone, for listening, and talk to you in 10 minutes.

So we're taking a 20-minute break now, so if everyone could be back in their seats around 9:55. Thank you.

[Break]

All right, everyone. Welcome back for round 2. I'm Stuart Hogue, Senior Vice President of the Americas. A little bit about me. I've spent my career building brands, scaling commercial organizations and bringing innovation to market. It's what I love doing. Just under a year ago, I followed my heart to YETI. I joined this great team because I love what YETI stands for. We are built for the wild, it's the theme of the day. And I saw the incredible runway for a brand with so much potential.

Today, it's my privilege to show you how we will unlock that potential and drive the next phase of growth here. This morning, you've heard about the strength of the YETI brand, our innovation pipeline and our major product platforms. Now I will show you how we will translate all of that innovation into incremental growth through a powered up and scalable commercial engine. I feel fortunate to be here. I feel fortunate to have joined this great team, fortunate for Matt's vision and leadership. We are building on such a strong foundation, a company culture and commitment forged over 2 decades to building the brand and the business the right way. And while we're very proud of the business we've built here, we are hungry for more. We are still in the early days of unlocking its full potential.

Innovation. Innovation only matters when people discover and use it. As you've seen today, our innovation engine is absolutely humming. My job is to take everything Hannah and Layne just showed you and turn that into commercial results by reaching more people, creating more moments for discovery and improving how we show up and sell. 20 years ago, we walked into McBride, a hunting and fishing shop right here in Austin with one ask, sell a $300 cooler. And if it doesn't work, we'll take it back. And after Roy jumped up and down the cooler a few times, they finally said, yes, and then more importantly, so did their consumers. They snapped them up. We sprinted to replenish and it all grew from there. The model worked. It drove traffic and created an entirely new category. And over the next 2 decades, we stayed rooted in retail and obsessed with the consumer as we expanded far beyond that first shelf.

Today, in addition to our robust digital business, across the Americas, we're in thousands of retail doors, plus 28 YETI branded stores of our own, including the iconic YETI Austin flagship on South Congress, where we are today. YETI is no longer just a cooler company. We are a global brand delivering for endless consumer occasions. And that comes to life in a few ways. We have more innovation to absorb, more people to reach and more places where we show up. Our commercial engine has to turn these strengths into growth. And that commercial engine needs to enable us to capture the significant runway for growth we have right here in the U.S.

We look at potential across a number of dimensions. Geographically, we are underpenetrated in key parts of the country, particularly in the Northeast, the West and in urban markets. We see another clear opportunity with younger consumers, especially those under 35, where our penetration remains well below more established YETI consumer groups. We have significant wallet share opportunity. We know they are spending in places where we play, and we believe our consumers should be spending more with us. We also see opportunity in the powerful pull that comes from our brand. We know that when we create owners, we create brand advocates who in turn generate YETI awareness. It's an ever accelerating flywheel that gives us a powerful force for growth, reaching more consumers in more places who in turn drive greater ownership and advocacy. We are bringing on a whole new generation of champions into the YETI brand.

And while the potential is immense, the ground beneath our industry is shifting, and it's shifting fast. Marketplaces, social commerce, agentic shopping, entirely new consumers are all evolving quickly, changing how people discover and shop every single day. The brands that will win in this high-change environment will meet people where they are while protecting their premium positions. Today, most YETI consumers already shop us on multiple channels. And they expect a great experience right for that moment regardless of where they start. It's why we're so selective with the partners we work with.

As we look to ride or better said, drive that next phase of growth, the question isn't whether this cooler company can keep growing. The question is how we unlock the full value of this brand in this increasingly diverse product portfolio. Where do we win? How do we scale? How do we maximize the opportunity ahead of us? What I do know, the winners won't just have great products and great retail. They'll have the strongest commercial platforms. Our commercial engine is that platform for scalable growth.

The YETI commercial engine is comprised of 3 components. We now have consumer verticals that serve as the consumer lens through which we build and deploy our commercial strategy. We have our channels to market, where we reach those consumers through a powerful balance of complementary retail destinations. And now we have a go-to-market process, a newly established operating system that is serving as YETI's end-to-end commercial spine. Together, these capabilities help us put the right product into the right place with the right story, all with discipline and repeatability.

Okay. Let's start with the consumer. Growth starts with understanding consumers deeply, knowing the moments they care about, the communities they belong to, the occasions where YETI can serve them and importantly, where they choose to shop. We serve millions of people across hundreds of pursuits. That's the strength of YETI. But it's also exactly why we have to focus to maximize our impact. To enable that focus, we've organized around 4 consumer verticals built on the foundation of the communities inside them: outdoor, sport and wellness, home and work. These aren't simply marketing segments. They represent some of the largest and most attractive growth opportunities available. Outdoor is large. It's also where we've grown up and where we've captured the most demand to date. Sport and wellness is a newer area of focus and represents a significant opportunity for our growth, and we are only at the beginning of capturing it.

Our home vertical is an exciting avenue for us to extend YETI's great Drinkware, cookware and living innovation across the entire home. And YETI is built for the job site. In the work vertical, we continue to see room for YETI to be an even more essential part of getting work done. The verticals aren't just room to grow. They are the lens through which we make strategic decisions about who we serve, where we show up, what we put on shelves and the stories we tell. It's also how we're now organized, giving teams the focus and accountability to drive results.

Cross that with channel and the same product tells a different story depending on where it shows up. A cooler that started in the fishing community shows up just as naturally for a tailgator, a contractor or a pitmaster. Same product, different story on the right shelf. That's what verticals let us do on purpose with precision and scale. And once we know who we're serving and where they shop, the next question becomes, well, how do we meet them there? And that's where our channels come in. Our channel balance is an incredible strength for YETI. We've grown wholesale to be 40% of our business, while DTC is 60%. Our DTC and wholesale channels complement each other by playing distinctive roles. Wholesale gives us consumer access and allows us to powerfully introduce and scale innovation. DTC gives us discovery, direct relationships and the loyalty that comes from our unique ability to personalize for consumers. They work in tandem. Wholesale expands the audience. DTC showcases the best of YETI while deepening the relationship.

And within that, each channel has its own job. Wholesale drives scale, YETI stores and Dot-Com drive discovery, Marketplaces drive reach and B2B drives the powerful advocacy that comes from an employee proudly associates where they work with a brand they love. That balance is our strategic advantage, and it's what makes us more resilient as commerce keeps evolving. With our wholesale partners, we are showcasing our innovation on more shelves. Aligned to our vertical lens, we're opening up new retail partnerships in college bookstores, golf shops, home specialty and more. And it's worth saying very clearly, our wholesale partners are an essential part of the YETI growth story. DICK'S Sporting Goods, Bass Pro, REI, SCHEELS, ACE Hardware, every one of them is investing with us through shelf space merchandising reaching thousands of doors across the U.S. Earning their trust is just as much our job as winning over the person who walks through the door.

And earning that leadership position with our wholesale partners comes down to the deep partnerships we've built where we work side by side to get the right product into the right store and onto the right shelf. And that creates incremental value in 3 ways. First, on the shelves that we're already on, data-driven merchandising enables us to sell more through improved velocity by optimizing the assortment we already have. Second, in those same stores, we are winning more space through product expansion and innovation, serving new consumer occasions well beyond the YETI pad. And third, we've done the detailed work to map out the premium doors where we aren't today, but should be to power the future of our product discovery. Put those 3 levers together, and we expect mid-single-digit wholesale growth across the U.S. through 2030. And the good news is this is the kind of incremental gain that is fully within our control.

All right. Let's look at some real-world examples of the YETI commercial engine coming to life and catalyzing growth. As we've expanded our Sports vertical, we've worked alongside DICK'S Sporting Goods, our largest national sporting goods partner to rethink how YETI shows up inside the store, not just adding more product, but merchandising solutions for athletes, the right assortment, better product adjacency, more integrated storytelling and a more complete YETI destination. This House of Sport activation through DICK'S Media Network gave us the chance to bring that strategy to life. This spring, we were featured front of store and showcased our newest innovation in Sport Hydration, the Silo Jug, along with a complete assortment built for game day. And in those locations, we saw a 40% to 50% lift in sell-through trend versus the locations that didn't offer this activation yet. We connected the right product in the right place with the right story.

We're running the same playbook elsewhere. Our sports license program is another example of how we're introducing a new reason to shop YETI on new shelves with new partners. Through our relationships with the NCAA, the NFL, MLB, NHL, NWSL and more, we've introduced our signature cup program and fandom series in college bookstores, stadiums, wholesale and fanatics. We are delivering the right story in moments of great consumer passion to drive yet another reason to proudly own YETI. And in golf, we're opening new doors where up until now, we haven't been before. With our step change move into green grass, we are now serving golfers from the tee box to the 19th hole by opening in pro shops across the U.S. These premium golf destinations represent a 6,000 door opportunity for us. These examples bring to life a model that we can run again and again partner by partner and door by door.

Now let's talk about YETI stores and YETI Dot-Com. Our stores and YETI Dot-Com are how we build the deepest relationships. And more and more, they are where we are proving out our latest innovation. Across our own channels, our share of new product sales drive meaningful contribution, proving stores and Dot-Com to be a showcase for what's next from YETI. Our stores give people the full brand experience. And when we open one, it lifts everything around it. We have 28 stores today, each driving a 5% to 10% lift in nearby channels. Localization is increasingly driving a lot of that, especially with our branded apparel expansion.

At our new Boston store on Newbury Street, nearly half of our sales came from an assortment localized to that market. YETI Dot-Com gives us something no other channel does, a direct relationship with the consumer and direct data. Consumers want products that reflect who they are, their teams, their passions, their communities. Custom Drinkware now makes up the majority of our online Drinkware sales. And those consumers come back to buy again and again at almost a 25% higher rate than non-custom buyers. We're pairing that with guided Discovery through Ranger, an AI-powered chat experience that is getting smarter and smarter every day. When the consumer engages with Ranger, we see at least a 2x lift on conversion. It's experiences like these deeply connected and personal that turn a purchase into a long-term relationship.

Now let's talk about how we extend our DTC business through our digital marketplaces. Consumers are increasingly beginning their shopping journey on digital marketplaces. Therefore, we need to be where they're going. We're growing our presence on marketplaces, going deeper with partners like Amazon, a scaled platform that wins on speed and selection. It's also a place to win when consumers are searching for solutions. A great example is with the growth we've seen in the new Yonder Shaker bottle on Amazon. As consumers are searching for help me find the best Shaker bottle, the Yonder Shaker is driving outsized growth.

We're also onboarding new marketplace destinations like TikTok Shop, which we added earlier this year. TikTok has been a great vehicle to inspire a younger audience. Since launching on TikTok, influencers have created more than 14,000 product videos viewed over 9 million times. With marketplaces like these and others, we are positioned to win as these platforms meet consumers where they are. We expect that combined marketplace reach will grow at high-single digits through 2030.

We're also showing up in a newer kind of platform, large language models like Gemini and ChatGPT. Across the 4 major LLMs, YETI ranks #1 in the cooler category for visibility, and we have 2x the visibility of our closest competitor in drinkware. This is a big deal. As more shopping starts with a question to an agent instead of a search query, we're already positioned to win that moment. If there is one takeaway from our focus on marketplace growth, it's this. We won't just wait for people to come and find us on our own channels. We are committed to finding consumers where they are today and where they're going tomorrow.

All right. B2B. Let's talk about B2B. B2B is how we describe our corporate sales business, and it's another significant growth opportunity for us. Historically, much of this business has been inbound and transactional. And today, we're transforming it into a strategic outbound growth business. We're proactively building corporate partnerships, leading with customization and serving their employees through gifting, recognition, onboarding and events. We're already doing this with important partners across travel, hospitality, construction and field-based work.

Increasingly, I'm excited because YETI product will not just be a corporate gift, but an essential gear for employees to get their jobs better -- to get their jobs done better. Since 2022, we have served over 20,000 B2B partners. One of our most exciting recent partnerships is with AG1, the fast-growing company dedicated to foundational nutrition. This partnership features our new Shaker bottles as a core component of their membership package. It's been a great way for us to drive product discovery that will then translate into more purchases down the road. We have more emerging examples like AG1. These brand partnerships are unlocking a whole new ecosystem of consumer discovery for YETI innovation.

All right. None of these channels operate independently, and that's where go-to-market excellence comes in. This year, we've launched an end-to-end go-to-market process that is moving us from a launch win-ready mindset to a more orchestrated and coordinated approach to ensure that when we do launch, we maximize our full commercial impact. This new operating system is powering our entire commercial engine, bringing together product, merchandising, marketing, sales, DTC insights to enable us to land innovation as strongly as possible. It's built as a scalable, repeatable system, driving greater discipline throughout the entire organization.

All right. Throughout this presentation, you've heard me come back to the same idea, the right product, the right place, the right story. Go-to-market excellence is how we make that happen consistently and most critically in an orchestrated fashion. This is the YETI commercial engine altogether. Consumer verticals tells us who to focus on and where the opportunity is. Channel balance tells us how to reach our consumers with wholesale and DTC working in tandem. And go-to-market excellence is what makes it repeatable, maximizing every launch through coordination and discipline.

Put those 3 together and you get growth that isn't dependent on any single bet. It's systematic, it's sustainable and it's focused. That's the YETI commercial engine. We've grown U.S. sales from $760 million in 2018 to $1.5 billion in 2025. We've doubled our U.S. business since we IPO-ed. Our next chapter takes us to nearly $2 billion by 2030. That's on a mid-single-digit 5-year CAGR powered by expanding the audience, access and lifetime value all through sharper and more integrated go-to-market.

Okay. I'll bring my part home. YETI has meaningful runway ahead in the U.S. We will unlock that significant potential through more consumers in more places and more spaces. That's how our commercial engine compounds growth. We will unlock mid-single-digit wholesale growth through the 3 levers we walked through today, better velocity, more shelf space and new doors. We still have untapped potential with our retail partners in the U.S. across all 4 verticals. And as a key part of our DTC future, digital marketplaces will drive high single-digit growth and the strategic elevation of our B2B partnerships will drive mid-single-digit growth to complement. That's the YETI commercial engine in action.

With that, I'll turn it over to Scott, David and Mitch to take you through how we're extending that capability and opportunity internationally. Thank you.

All right. Thank you, Stuart. Good morning, everyone. My name is Scott Bomar. I'm the Chief Financial Officer. It's my absolute privilege to be here to kick off the international discussion. I couldn't be more excited to talk about this.

So you've heard this morning about a brand that travels. We spent the last several years building the foundation to take YETI to more consumers around the world. We built awareness in key markets, invested in capabilities and teams to support the growth and streamlined our model so we can scale more effectively. I'll walk you through a repeatable playbook we've created and continue to refine for how we're scaling this brand around the world. And then Mitch and David will talk to you about how we're using it to accelerate in Europe and how we're applying everything we've learned to extend our reach across Asia Pacific. International is no longer at the edges of our business. Our presence outside the U.S. now equals what our entire business was just 10 years ago. We've grown from approximately $20 million in 2018 to $390 million in 2025, a greater than 50% compound annual growth rate. And we have our sights set on a $1 billion international business by 2030.

The real story isn't just growth, it's how we've grown. Europe and Asia aren't single markets. There are a portfolio of unique under-penetrated opportunities that we enter with the same approach every time. Each market has its own nuances, but the playbook works and is repeatable. We earn trust credibility first, activate the brand more broadly and then scale through extended distribution. Australia and Canada got us started and proved the model. U.K., Germany and Europe leveraged it, refined it and showed us that we can run it faster. And then Japan, Korea and China are where we begin the next chapter.

So here's what's making that expansion possible. First, we apply the same repeatable playbook market after market. Next, we stay asset-light, so we don't have to spend our way into the growth. And then finally, we ensure the growth doesn't just add sales, but also adds profitability. And as we look to the future, we expect the international business to be accretive to enterprise profitability. With each new market, we learn, we refined and we cycle through the steps again. You saw this playbook earlier from Bill, the guide, the angler, the Pitmaster, the climber, the elites who live a pursuit every day. That's where the trust starts. To the enthusiasts who are deeply engaged, to the participants who engage more casually, down to the spectators like myself, who may rarely take part but are influenced by everyone above them.

And while the specific pursuits vary by market, the approach remains the same. Phase 1 builds credibility with the specialists at the top, Phase 2 activates the brand more broadly with local relevance. And then Phase 3 scales through an extended go-to-market. Each market follows the same shape.

So let's look at Australia as a case study. Year 1 was about establishing credibility through community marketing, establishing a premium dealer network and then launching our e-commerce capabilities. It was that same specialist first approach you saw in the pyramid. Years 2 through 4, we scaled to 300 dealers while accelerating brand advocacy with YETI communities and direct-to-consumer. Years 5 through 8, we grew to over $150 million in revenue by moving to national accounts, opening 65 VCF doors and expanding into national retailers like Rebel Sport. It's the same 3-phase pattern, credibility, activation, scale, told in real years and in real dollars. Our success in Australia and our success in Canada came down to a few things: one, finding the right partners to help establish ourselves; two, investing in our own channels, especially the digital channels; and finally, scaling with key retail partners across the region for broader reach. And as we've opened new markets, we've learned. And as we've learned, we've adjusted, and that's what gives us confidence we can scale further and faster in the years ahead.

Australia taught us that every time we repeat the playbook, we get better and faster at running it. And you can see that on the learning curve here. Canada scaled from $50 million to $150 million in 6 years. Australia did it in a little over 5, and Europe is on track to reach the same milestone in just over 3. It's not a coincidence. Every market we enter carries forward the learnings, the infrastructure and the credibility from the last one. We've entered 15 markets without heavy capital investment. And every time we've proven the model works, we put more resources behind it. It will take us nearly 8 years to reach our first $0.5 billion of international sales. We know we can capture the next $0.5 billion in half the time because we've built the awareness, the talent and the model that will get us there faster.

So here's our plan, building a $1 billion international business by 2030. That's a 20% compound annual growth rate and we take international sales past $1 billion across 30 markets around the world.

Now I'm going to turn it over to Mitch and David, who are going to tell you about how Europe and Asia are going to fuel that growth in the coming years. And before I do that, here's a quick film to give you a sneak peek of the people, places and product of EMEA and APAC.

[Presentation]

Good morning, everyone. Thank you, Scott. I'm David Heath. I'm the Managing Director for YETI EMEA. Having spent 35 years in the sports and the outdoor industry, I've had the privilege of seeing a lot of change, but very few opportunities are as compelling as the one we have in front of us today. I lead our business across EMEA with responsibility for delivering our growth strategy and continuing to build YETI's presence across our key European markets. Today, I'd like to share why we believe the opportunity in EMEA is so significant and how we're positioning YETI to capture it.

So as you've seen, we've laid the foundation. We've proven the playbook works globally and are now accelerating in Europe. However, Europe is a highly fragmented market. So the execution looks a little different here, but the underlying formula isn't. We're field tested and we're ready to scale. That's exactly where we are with Europe. And there are a few reasons we believe the opportunity is so compelling. The size of the market, the product market fit with YETI and the traction we've already built.

So let's start with the market. The European market is enormous, and we hold less than 1% of it today. The door is open, and there is no native outdoor brand we need to unseat here. Globally, the premium total addressable market is $121 billion, and Europe alone represents 20% of that at $24 billion and is projected to grow at a 5% compound annual rate from 2025 to 2030. And within that $24 billion, Home & Hydration categories make up the majority at 55%. Bags & Soft Coolers make up approximately 30% of the market and Hard Coolers and equipment at 15%. But all this only matters if we have the right to win, which we absolutely do.

Europe already has a lot going for it, and YETI is uniquely positioned to serve 3 in particular. First, strong outdoor culinary and sport cultures. These are established pursuits we already engage well with. Second, high demand for premium and performance products; and third, a growing focus on hydration and sustainability with people carrying water bottles everywhere they go and paying attention to how much they drink.

When you take a deeper look at the communities themselves, the fit gets even stronger. Europeans are already participating in the pursuits we serve and sports participation runs at roughly twice the U.S. rate. Outdoor pursuit participation is on par with the U.S., and this isn't a market we have to convince. It's one that is already primed. We move into European markets just like we do everywhere else with our same repeatable playbook. Phase 1 looks like it always does for us, getting started with specialists and independents going into communities where we knew there'd be a natural fit for YETI.

In the U.K. and Germany, that meant barbecue culture, specialty outdoor shops and lifestyle-driven retailers. We followed barbecue into places we didn't expect next to brands like Green Egg and Gozney into garden centers and into corporate gifting. That early credibility became our launch pad in the U.K., and it's already rippling across the rest of Europe.

As we move to Phase 2, we're extending the brand with grassroots campaigns, localized content to reach wider communities and adding additional partners. And then into Phase 3, where we fully scale the market through distribution partners, direct channels and national accounts. So where do we start? We are prioritizing 3 regions across Europe, each one with a different job. The U.K. is about acceleration. We already have real traction there, which we're looking to take up a notch. Germany, Austria and Switzerland are about unlocking the DACH region. The fit is strong, but we're still early, and there's work to do to open it up. And across the rest of Europe, the focus is replication, taking what we learned in the U.K. and the DACH and applying it everywhere else, notably through Iberia, Italy, France and the Nordics.

A key piece of our playbook here in Europe is that we turn market fit into momentum through local relevance. We have over 30 active brand ambassadors and 180 more we've seeded across the region. Alongside the people we have built strong partnerships to, we have over 100 partnerships with globally recognized brands, our audience already trusts, Oracle Red Bull Racing, Team England at the recent Commonwealth Games, Jaguar Land Rover and the Defender brand, Scottish Rugby, Tottenham Hotspur Football Club, just to name a few, plus over 300 regional activations in 2026 alone, extending YETI's reach into the communities where those brands already live.

A good example is the Game Fair, an event in Britain that brings together the agricultural, hunting and fishing communities. The Game Fair has become one of YETI U.K.'s most important annual community activations because it brings the brand directly into the heart of the field sports and the outdoor lifestyle community. Rather than simply display products, YETI has created numerous experiences that connect with attendees' passions. By showing up consistently year after year and creating authentic moments, YETI reinforces its credibility within the community while continuing to generate record-breaking sales.

Our customer shops on-site consistently run out of capacity to meet the ever-growing demand we face each year. Another example of a strong, authentic partnership is Land Rover Defender. Over the last year, not only across EMEA, but globally to across 120 countries, 100,000 defenders have been sold with a handover pack that contains a Yeti Rambler. And it's not just the delivery where we show up. In January this year, we also partnered with Defender rally at the Dakar Rally 1 of the toughest off-road endurance races on the planet across the Saudi desert.

Our hard coolers, Rambler Drinkware, Pangers, Crossroads and Ranchero bags were all integrated into the Defender, rally cars and stood up to the test and performed in some of the harshest conditions. Each one of these shows Yeti's durable performance-driven designs doing what they were built to do, playing an essential role in the moments that matter, not just sponsoring them from the sidelines. Now we are converting that credibility into much broader distribution and demand. Across Europe, we have 4 unique channels, each tuned slightly differently by market.

Overall, from 2025 to 2030, we expect growth across all of them. but especially in wholesale and marketplace, seeing growth in the 40s, but the mix looks different depending on the market. In the U.K., wholesale is our strongest growth channel in dark, marketplace leads and across the rest of Europe, wholesale and marketplace both carry strong momentum with dot-com and B2B growing steadily behind them. As we get into more doors, we create and capture more demand. There are over 100,000 relevant doors across Europe, spanning every vertical we play in.

Of those are yet relevant doors we should be pursuing. We're active in just 1,500 or 6% of them today. That gap represents a $700 million plus incremental wholesale opportunity, and it's the single biggest lever we have across Europe. We are already making progress on our goal -- we started last year with a 6-door trial in GO Outdoors, one of the U.K.'s largest outdoor retailers. We're now in 60% of their doors and in all of their major flagships. And by the end of this year, we'll be in 80% of all of Cott's world outdoors. These partnerships are a massive unlock for us in the U.K. I've already mentioned that Europe is fragmented and deeply diverse and complex. The same goes for its retail market, which is fragmented with more channels and more variation than what we have in the U.S. But that doesn't mean the growth isn't there. It means we must be more flexible in how we take advantage of it. In Europe, we're also applying the consumer vertical lens to our channel strategy.

Today, we only play in just 2 of the 4 verticals in which we are more heavily indexed on outdoor. By 2030, we expect a real mix across all 4 verticals in Europe, outdoor at 50%, the clear leader, sports at 10% and home and work at 20% of sales. As we work to accelerate the U.K., let's consider how we've performed so far. When we first opened in the U.K., we were almost immediately disrupted by COVID. So we pivoted from focusing on retail expansion to direct-to-consumer and built out yeti.com. When the world opened back up, so did our attention on retail. We deepened relationships with specialists and independent retailers in Outdoor & Home, while building strategic brand partnerships and it worked. We have now become the #1 outdoor hydration brand in the U.K.

One key community that is greatly influenced us within the U.K. is the surfing community. And we, in turn, have embraced it with Yeti's Board master's activation strategy. Rather than approaching board masters as a traditional sponsorship, YETI became an active participant in serve culture by creating authentic community-led initiatives, such as supporting the wavelength athlete barbecue, hosting a live surfboard shaping session with renowned surfer Ben Skinner and creating a server guest book that encourage interaction and connection amongst visiting athletes. YETI also invested in upgrading the Board masters competition providing local athletes access to higher-value ranking opportunities and attracting competitors from over 18 countries.

Together, these efforts demonstrate YETI's commitment to listening to and investing in the communities it serves, transforming brand presence into genuine community value and positioning YETI as a trusted long-term contributor to the growth and progression of U.K. surf culture. This ongoing connection with surf in the U.K. has led to a high degree of resonance for the YETI brand in the South and Southwest of England. Especially in Devon and -- which are home to the U.K.'s largest surfing communities.

It also happens to be where a lot of Londoners holiday in the summer months. So while our sales have been profoundly strong in this area of the country, we are seeing the groundswell that was built by the surface now catching on in London. Wholesale door growth in the capital has expanded sixfold in just the last 12 months, and Greater London is our fastest-growing region in the U.K. online. It's the same pattern from our consumer model starting with elites and cascading down to additional audiences with an emphasis on local relevance.

Despite all these strides, the U.K.'s potential isn't anywhere near unlocked. There's room ahead through 2030. And if we look at where the U.K. sits today against the markets, we've already proven out the gap is stark. Sales per capita in the U.K. is just $0.18 to the dollar compared to the U.S. compared to $0.82 to the dollar in Canada and Australia 120 awareness tells the same story, just 31% in the U.K. against 57% or higher everywhere else, we've scaled. That distance is our opportunity.

Simply catching the U.K. up to Canada is worth approximately $200 million in incremental annual sales. That's not a stretch. It's simply bringing the U.K. up to par with where our other proven markets already are. To capture that opportunity, we're building 1,500 wholesale towards 1,500 wholesale doors with national accounts. around 10 monobrand stores in key cities and locations, solid growth on yeti.com and marketplaces and deeper B2B partnerships.

Putting it all together and the U.K. grows in the high 20s through 2030. This is more than one growing market. It's the beacon of what a fully scaled YETI market can look like in Europe. If the U.K. is the beacon, dark is where that light reach is next. By 2030, we're targeting more than 600 wholesale doors with a complementary wholesale digital presence around 5 monobrand stores in key cities Three or more marketplaces, including Amazon, Zalando and auto and replicating the same B2B model that's already working in the U.K.

Together, dark grows in the high 40s through 2030 anchored in Germany, Austria and Switzerland. So that's the U.K., that's dark. Now put them together with everything else happening across the region, $80 million today, $350 million by 2030. And that's a mid-30s compound annual growth rate for the entire region, and it's not coming from 1 place. The U.K. keeps growing with wholesale, e-commerce, national accounts, and untapped verticals are still opening. Dark is our fastest mover through wholesale and direct and the rest of Europe, Spain, Italy, France and the Nordics, grocery distributors and sales partnerships.

Now I'll hand it over to Mitch to talk about Asia, a place that we have the opportunity to apply everything we've learned from the very beginning. Thank you.

Thank you, David. Hello, everyone. My name is Mitch Whitaker. Managing Director for YETI APAC. Just a little background on me. I joined YETI just over 1.5 years ago, and I'm currently based in Tokyo. I spent nearly 20 years of my career living and working in Asia, building strategies teams and capabilities to bring global brands to life. Today, we've shown you the globally proven playbook that started in the U.S., Canada and Australia and how David is now going to bring it to life in EMEA.

If there's anything you remember from me today, I'd like to be this. There's an incredible opportunity in APAC, and we're just getting started. So in Asia, we're asking the same questions that Europe asked, is the market attractive? Does YETI have fit? Can our playbook travel? The answer is yes. And Asia is ready for YETI's next breakthrough moment.

So let's start with the town for Asia. It's massive, and we currently hold under 1% of it today. Of the $121 billion global premium market, Asia represents $40 billion, growing at a 4% compound on your rate. Home and hydration make up about half of Asia's premium addressable market. Bags and soft coolers make up another 45%. Japan alone represents nearly $13 billion bags market. [ Crea ] adds another $9 billion in bags. And our sales reflects that diversity. In our very first year of e-comm in Japan, our cell splits nearly 50-50, Dreamcore and everything else. This is key because showing up is a platform diverse brand is how we will win in Asia.

So first, the outdoor market is yet has a strong fit in Asia period. I just want to make that statement. YETI has a strong fit in Asia period. First, the outdoor market is robust and it is strong. Hard coolers and rampers are already showing up at camp sites, campgrounds and youth baseball games across Japan. I like to cycle. So cycling 1 weekend in Tokyo in the suburbs and came across several baseball fields. As the rose of bicycles parked with coolers sitting in the front basket in some form of Dreamcore next to each young athlete. That was an aha moment for me.

Second, there's a deep appreciation for premium product design and craftsmanship, which are hallmarks , which are hallmarks of YETI. And third, and importantly, temperature control, whether cold or hot is already part of Asian deep culture. One of our Japanese global ambassadors talk to me about the value of not only YETI cooler but yet warmer as part of health in Asia. That was another aha moment for me. Asia is an incredibly relevant market for YETI. We're just getting started to tell our story right now.

This year has really been about business development, opening markets and channels across Asia. Now we're applying the same global playbook as we start to write our Asia chapter. The playbook is clear. We've talked about it a lot today, earn credibility, build the brand, then scale it. We're just launching our Asian markets right now. So our focus going forward is to rapidly grow our distribution channel, build credibility in places and pursuits or YETI resonates. And importantly, show up in ways that connect to our consumers. It all starts with cultivating local community and global ambassadors, as Bill mentioned today, to amplify our story as we lay the groundwork to scale.

So Phase 1 is already underway. We ended 2025 active in 4 markets across APAC, including Australia and New Zealand, who've been there for about a decade. By the end of '26, this year, we'll be active in 11 markets and on a path to nearly 2,600 doors across APAC by 2030. That gives us sizable physical and digital footprint to build credibility and demand. But just as in Europe, not every market has the same job or role. Like Europe, we are focused on priority markets.

To start, Japan, we're building credibility through Japan as the anchor for the Asia region since the region -- the rest of the region looks to Japan first. It's a very influential market. In Japan, we're now in 5 -- over 500 wholesale doors. We've launched e-com and launching our first YETI retail store in Japan in Q4 this year. It's very exciting.

Next, Korea. We plan to leverage Korea as a center of influence where Japan is about credibility Korea is an aspirational market for the rest of Asia due to its K-Power, if you know, you know what I'm talking about. We will open our first Asia flagship in Seoul also in Q4. I'm telling you this store is going to be impressive.

And next, China. We're laying the groundwork for meaningful growth in China. We've already started to engage with local communities and ambassadors as we prepare to enter China in select e-com marketplaces starting Q4 this year. We'll build brand awareness in preparation to start scaling China in the near future. So in Asia, we're not just trying to build demand. It's already there. It's waiting for us to show up. Outdoor pursuits see roughly 3x the participation we see in the U.S. and sport participation runs right in line with that. What's been a great signal for us is how our core communities in Asia are welcome us with open arms and excited that YETI is finally here.

So in Japan, we just hit our first year anniversary, and we've made meaningful progress to build brand presence. We currently have 12 local ambassadors, including 2 global ambassadors from Japan. And we're aggressively seeding and connecting with YETI brand right individuals across Japan across our IDI communities in Japan. The 20-plus brand activations to date are helping us build credibility and trust as we start amplifying our presence. That also means shown up where it matters most. So recently about -- within the last 2 months, there was a pretty devastating earthquake in Kumamoto, Japan, kind of Southwest in Japan. Our team got together, we donated Rescue Red, Tender coolers and Roadies, silo jog, silo water jugs and ice packs to assist relief operations on the ground. We're welcomed with warm arms. These partnerships and relationships matter.

We'll drive growth through all 3 channels working together. We've already built strong wholesale partnerships in -- across Australia, now in Japan and soon the rest of Asia. D2C, both physical and digital will be important channels to tell our brand and product stories, particularly in new markets. We plan to have approximately 180 retail stores across APAC. The entire region by 2030. Most of them run through strong partners.

Digitally, we're growing e-com while leaning into strategic e-comm marketplaces. And lastly, but importantly, we'll use smart localization really around content and product to make sure we're showing up in a very globally consistent, locally relevant way. Look, for all these reasons, we have a bullish outlook on APAC. We expect the region to more than double from $150 million today to $300 million by 2030, a low 20s compound annual growth rate. In Asia, that growth will be led by Japan, Korea and China as we expand wholesale, digital and YETI retail stores, in addition to launching customization. We expect low triple-digit growth in Asia.

In our Australian and New Zealand markets, it's about penetration into urban markets and communities, including Melbourne and Sydney as we expanded 80 retail and sports. We are extremely healthy in our Australia and New Zealand markets and have room to grow high single digits. So let me step back and kind of paint the whole picture. It was started in a handful of markets is becoming something much bigger. Canada proved the brand could travel. Australia proved the playbook could scale, and Europe is proving we can do it faster. And now in Asia, we're taking everything we've learned across all these markets and are at the beginning, but with extreme head start.

Every market makes the next market stronger. Canada Australia, the U.K., Dot countries, Japan, they all started with the same discipline and followed the same pattern. Each market is scaled faster than the one before it because the playbook, it's proven. And it's locally relevant every time we put into practice. The places change, the pursuits look a little different. The cultures are nuanced, but what makes YETI does not change. So when we look at the opportunity ahead, we don't see just see countries on a map. We see more places where YETI belongs, more communities to make their own in a much bigger world for YETI than the one we serve today. And we're just getting started.

With that, I'll turn it back to Matt to wrap up before we walk through the numbers. Matt?

Thanks, Mitch. Everything you've heard so far, that's why I'm here. That's why this team is motivated. And I think that came clear. And you should sense it from this team because they represent all the -- YETI and what we believe in the future.

But I'm going to do something a little out of sequence. We're going to have Scott come up. He's going to talk about the model. He's going to talk about the building of the financial algorithm. But I want to talk about what's next. When you put everything you've heard today all together, you can see how much runway remains in front of us. there's a ton of opportunity. You heard that word opportunity. You heard model, you heard playbook, you heard system. We built the capability to go capture it. brand, innovation in the U.S. around the globe. We've earned the right to be bolder and make no mistake, I'm fully behind it. But more importantly, I'm confident we have the team and the systems to make it happen. So this morning, we're focused on the next $1 billion of revenue, the next $1 billion product platform, $1 billion outside the U.S. You just heard that from Mitch and David, $1 billion plus of free cash flow. You've seen how that happens at pace with balance and delivered consistently.

But what I want to do before I hand it to Scott is I'm going to go one step further beyond the plan. And what I'm going to talk about is focused and deliberate. It's not a distraction, but we're moving towards it. So here's where we're going next, in bags and soft coolers. You heard the investment case from Elaine. This is a massive global category, and we're still early. What I'll add is we're actively extending into travel in everyday use, building on what day trip Camino, Crossroads and Scala have started.

One thing within that, we want to explicitly call out luggage is a discrete area of opportunity. Today, we have a limited offering and 2-wheeled luggage, but there's real expansion potential. hard side, further soft side, for -- luggage, they're all logical next steps, and we're heading there with pace. Once in that market, it opens incremental expansion opportunity across the full travel category globally. The opportunity in soft coolers and bags is compounding and only a portion of it is captured in what we presented today.

Next, apparel. We already see the consumer desire and significant upside of YETI branded apparel, hats, teas, hoodies, sun shirts. Those who were here saw some of it last night. People want to wear this brand. and we aren't fully addressing the demand. We see the pockets of success -- in our stores, the expansion potential is meaningful. But the bigger opportunity long term is technical performance apparel. Applying the same durability, the same field tested standards, the same design rigor we bring to everything else we make. It's a large fragmented global category, open to innovation and with space for YETI to lead, doing apparel our way.

In a few weeks, you'll see our first limited releases, a range of insulating and outer layers just in time for the weather to turn. These are going to be available through select distribution partners and select flagship specialty. We're going to learn and we're going to scale into it. Most importantly, we'll be showcasing the capabilities and the talent that we've acquired over the last couple of years. The design and materials expertise we have gathered is outstanding. This is going to be fun to watch.

And in home and hydration, you heard a good bit about it from Hannah today. But cookware is a new frontier as she discussed. Carbon steels in the market, the early response has been strong. It was recently recognized best of by a number of publications. It's a great example of product ready to be executed by a commercialization engine, the one that Stuart, David and Mitch talked about.

Cast irons and natural anchor in the platform. It's very YETI. The next large and attractive market expansion is enabled cast iron, continuing the theme of live fire outdoor to indoor translating the YETI philosophy and product trust to people who take cooking as seriously as we take everything else. In the backyard, the camp site, the kitchen.

And then global expansion. You heard from David and Mitch today, you understand how excited and fired up they are. But our biggest chapter is still in front of us. And only some of it is included in the growth algorithm that Scott is going to talk about. There are strong markets in Asia, particularly in China, the Middle East, Central and Latin America. We expect to build into those over time and over the horizon. As those come fully online the impact to the algorithm is meaningful. And then there's our YETI experiences. We've been testing and learning and experiences. You heard today that story about and you may have seen the YETI open.

Come to life and fishing, upwards of 1,500 anglers joining a weekend fishing event in 2 weeks, headline by YETI. Now in its third year, Bill and team are going to be up there doing what they did last night but out in the community. In golf, we partnered to host the recent and oversubscribed YETI Cup at Cabot, and we do our annual fishing holes, layer those types of events on top of everything we do across 14 communities 200-plus ambassadors, 450-plus events, 350-plus partnerships all over the world, and you can see the potential for YETI experiences. YETI as a brand stands alone is uniquely positioned to bring people together around shared passions and interests.

The opportunity is bigger than 2 sports and a couple of events. That's what our brand team does. And from our earliest days, we brought people around the campfire. The YETI experiences are evolving into a platform, bringing our communities together where people want to meet, a place where all types of fans, athletes across our communities and beyond. Come together to share their obsession for whatever their pursuit is and their connection to YETI. Everywhere YETI's deeply embedded experiences has relevance. It strengthens our connection to those who built this brand. And it introduces us to those just discovering it. I'm really excited to see where this could go, connecting product to unique experiences.

Now everything you heard today, the brand expansion the tune commercial engine, international accelerating, bags and soft coolers scaling. That's what's in the number Scott's about to talk you through. We'll walk you through. But at scale, apparel, cookware, travel and luggage amplified, China, Middle East, Latin America and an experienced platform like the YETI open, those are brand-right potential and realizable upside. In the systems we built the ones you've seen in action all day today. It's what gives us the confidence that the next billion is within reach, and that's just the beginning.

I'm going to turn it over to Scott to hit the financial plan. excited to show you what we've got next. Thanks for your attention today. Scott.

Okay. Thanks, Matt. So earlier today, you've heard the strategy. the brand, the products, the go-to-market model, the international opportunity, let's now connect those strategies to the financial outcomes they'll produce for shareholders. The core of our thesis is straightforward. We have multiple avenues to grow an operating model with meaningful opportunity for leverage and productivity and a disciplined approach to capital allocation. When those elements work together, sales can grow at a healthy rate, operating income can grow faster than sales, and earnings per share can grow faster than operating income. These are the foundational elements to financial model built to compound.

Several of you have asked me about my observations in my first few months on the job here at YETI, and I put these into 3 buckets. The first is that YETI has an incredibly strong foundation. We have the durable brand you've heard about this morning. a disciplined operating model, healthy margins and a strong balance sheet.

The second is that yet is ready to scale. We've got the experienced leadership team, real capabilities and a strong record of executing on what we said we do. And the last, which is the one that gets me most excited is we have a very long runway. We've got room to deepen our relationships with existing customers, expand into new categories, as Matt just described, new geographies and new distribution. We have multiple distinct growth levers ahead. And every turn new opportunities present themselves. That's what surprised me most of my first 6 months on the job, Rarely does a week go by where we don't identify a new opportunity. There, the opportunities are everywhere. It's just about execution.

Some companies give you 1 or 2 of these, yet it gives you all 3 and that combination is rare. It's not just about 1 geography, 1 product or 1 initiative, it's a combination of a durable brand, a growth platform, a management team that understands how to scale and a financial engine to deliver excellent shareholder returns. This combination of factors has already created meaningful shareholder value. From IPO until 2025, sales compounded at 13% and earnings EPS at 15% and total shareholder return at 15%. Over that same period, we generated cumulatively $1.4 billion of free cash flow.

These outcomes tell us 2 things: One, we've been able to translate brand demand into profitable growth; and two, our asset-light model has converted a meaningful portion of that growth into shareholder returns. This team has a track record of delivering performance. I'm going to walk you through a financial algorithm in 3 parts. First, where does our growth come from? Second, how do we allocate capital? And third, how do those 2 things combine to create a financial model built to compound?

None of these stand alone. Growth creates scale, productivity and operating leverage translates scale into faster earnings growth and cash generation gives us the capacity to reinvest in the highest return opportunities while returning capital to shareholders. Since our IPO, we've grown from $800 million to $1.9 billion, that's a 13% CAGR, as you mentioned before.

Home and hydration remains our largest category and the diversification strategy within the portfolio continues to deliver results. It's an important anchor, but it's not the whole story. Gearing equipment has expanded and bags and soft coolers have become a meaningful growth leg. The fastest-growing portions of the portfolio are broadening the ways consumers use YETI. While some of our longest-standing items like the Tundra 45 and the Rambler 20 continue to deliver positive sales growth reflecting the durability of these iconic SKUs. Combining that solid base with our powerful innovation capability gives us confidence in our long-term mid- to high single-digit growth expectation.

Looking to 2030, we expect the portfolio to become larger and more balanced. We expect to deliver mid- to high single-digit sales over this horizon. The individual pieces you've heard about from my colleagues this morning throughout the day, add up to the high end of this range. And while or intend to deliver that and more, the economic model works for the business very well even at the low end of the range. and I'll talk to you more about that in a few slides.

Home and hydration will continue to grow and remain the largest category, but a greater share of the incremental growth is expected to come from bags and soft coolers, gear and equipment and newer platforms. That mix shift is healthy. It creates more usage occasions, attracts more consumers and reduces concentration around any single category. The path to mid- to high single-digit growth is not dependent on perfect execution. It's built from several engines working together, core innovation, commercial optimization, distribution expansion and international growth. Our job is to sequence the investments carefully and scale each platform as the consumer and the economics validate it.

Our international business is one of the clearest examples of the portability of the YETI brand. At IPO, International was only 2% of sales. By 2025, it represented 21%, with sales compounding at over 57% for the period. That progress matters not just because of the growth rate, but it shows that the playbook travels. And globally awareness of the YETI brand trails out of the United States, but we're making real progress, and we're starting to see the results as several newer markets are really scaling. And that early momentum gives us confidence in the opportunity, while our market-by-market approach keeps us grounded in local consumer response and economics.

Our newest markets are already scaling faster than in the past, and Europe is our next major unlock. It's a large market with a lot of potential. And we're starting to have enough scale in Europe where the significant growth rates that we're already seeing there are becoming consequential to enterprise performance. And while we're just getting started in Asia, the early signs are positive, and it points to a significant opportunity over time.

By 2030, we expect international to approach roughly 35% of sales compared to 21% in 2025. That doesn't mean applying one global formula everywhere. It does mean leveraging the approaches that we have been successful in the past, have you heard about this morning a few times, earn trust and credibility first, activate the brand more broadly and then scale through extended distribution. We expect the United States to continue growing at low to mid-single digits, while international grows in the mid-teens to 20% and becomes a larger part of the portfolio. This geographic mix gives us another durable growth engine and a more balanced company.

To deliver against this opportunity, we'll remain deliberate in our investment pacing talent deployment, inventory management, and we're going to drive market level accountability. Growth opportunity alone does not create shareholder value. That return depends on what we spend, when we spend it and what we receive in return. And that's where the second part of the thesis is disciplined capital allocation. We intend to fund the opportunities that strengthen the long-term earnings power of YETI, maintain financial flexibility, return capital to shareholders when it's the better use of cash.

We think about every dollar the same way against 4 priorities. The first priority is to fully fund the highest return organic growth opportunities, including international expansion and innovation. The second is we were very selectively consider tuck-in acquisitions when they accelerate capability, provide intellectual property or talent or speed to market that will be difficult to replicate organically. And third, we'll maintain a healthy balance sheet, keeping leverage low, sometimes at 0. We believe that maintaining that flexibility is strategic, particularly in a dynamic consumer environment.

Fourth, we return capital to shareholders. After funding those priorities, share repurchases are our primary vehicle for returning excess cash to shareholders. The governing principle across all 4 uses is return on invested capital. We are not optimizing for activity. We're optimizing for durable per share value creation. We have a capital-light model with high-return investments, so the bar for spending do internally is high. If a dollar can't clear that bar, it goes back to the shareholder.

An important feature of this plan that growth investments and margin expansion are not competing ideas. We see meaningful opportunity to drive productivity across sourcing, marketing, technology and enterprise processes. We've launched an internal program called Project upcycle to deliver these gains, and I'll talk more about that in a second. The savings from that program creates a source of funding for the capabilities that drive future growth, including international expansion, innovation, brand building and digital and customization. We'll evaluate these investments with the same discipline we apply elsewhere, clear ownership, defined milestones, expected payback and measurable outcomes.

So let me circle back to project up cycle because it's central to how we bridge top line growth to sustain margin expansion and operating income growth. Project up cycle is a $100 million enterprise-wide productivity program. And I want to be clear about what that means. It's a discrete commitment with a comprehensive governance model, supported by both dedicated internal resources and external support. Every work stream as an owner, a time line and a financial target. So let's talk about the scope.

On the cost of goods side, we've identified a $50 million opportunity. That's more than 15 active projects today, spanning raw materials, finished goods, packaging as well as value engineering and supply chain optimization. On the expense side, we have identified another $50 million opportunity. That's 30 active projects today covering logistics distribution and spin pools up and down the P&L. It also includes marketing optimization, making every brand dollar and performance dollar work harder and importantly, AI process improvement. We're developing new tools to drive efficiency and speed across the organization. That's 45 active projects balanced across the P&L already in motion. We expect this benefit to build over time rather than arrive all at once.

The purpose of project up cycle is to amplify our future, to build a more productive operating model, 1 that does 3 things at the same time. First, it funds the growth initiatives you're hearing about today, brand innovation, commercialization and international. Second, it covers any mix pressures that may occur over time. And third, it expands margins through sustainable improvements, not onetime actions.

And as Matt summarized earlier in the program, fuel the investments, expand the margins at the same time. That's the commitment. We're highly selective on inorganic opportunities and our track record shows it. 4 acquisitions over 12 years in bags, home and cookware, powered coolers and hydration. We use M&A to buy speed or capability, typically in the form of product knowledge, intellectual property specialized talent or development capacity that can strengthen the YETI platform. It's simply a form of product development and typically small in scale, having spent only $116 million across 4 transactions. We're really happy with the results we've seen in our recent acquisitions.

Mystery Ranch gave us capability and talent that serves as the backbone to our fast-growing bags business. Helamix gave us product adjacencies with a real volume potential and really strong early trends. Our power cooler and butter pad acquisitions gave us capability and innovation in categories we couldn't build fast enough on our own. Our discipline goes far beyond the term sheet. We guard the brand, integrate quickly and measure the returns. The threshold is high. Any transaction must protect brand trust, have a credible integration path and offer attractive returns relative to organic alternatives and returning cash to shareholders. We'll continue to measure acquisitions by the value they create, not with the number of deals we complete.

Since the IPO, total debt has declined from $330 million to approximately $74 million and debt-to-EBITDA has fallen from 2.2x to 0.2x. That financial strength gives us choices. We can continue investing through volatility, respond to attractive opportunities, manage external risk and return capital without placing the long-term health of the business at risk. We carry load to no leverage on purpose. It's strategic flexibility, a balance sheet built to fund growth return cash through buybacks and still leave us flexibility for future opportunities.

Through 2030, we'll generate more than $1 billion in free cash flow, nearly all of which will be available to invest in the business and return capital to shareholders. Since the IPO, we have repurchased nearly $700 million in shares. Cumulatively, that equals 17.8 million shares and roughly 20% of diluted shares outstanding. From 2024 to the end of 2026, we will have returned approximately 100% of free cash flow to shareholders through repurchases. Supported by our cash generation, confidence in our earnings outlook -- we target returning a minimum of 50% of free cash to shareholders. And to say it again, from 2024 until the end of 2026, we have returned approximately 100% of free cash flow to shareholders.

Repurchases are not a substitute for growth. They are an outcome of a model that generates more cash than is required to fund its best opportunities while maintaining a strong balance sheet. We will remain disciplined with the objective of increasing long-term value on a per share basis. Put growth and capital allocation together and you get our financial algorithm, how we turn top line into earnings growth year after year.

We have a high level of conviction about the long-term growth prospects for this business. I'm showing a mid- to high single-digit long-term sales growth algorithm in the left column, to illustrate how the economic model of YETI can deliver strong results even at the low end of the range. And while there's an opportunity to be a double-digit grower over time, this model works even at lower sales levels.

At the low end of the range, mid-single-digit growth, we're assuming 0% U.S. drinkware growth, low single-digit global drinkware growth, no contribution from additional domestic distribution modest growth in our bags business, new product development largely remains within our existing categories and a continuation of the strong results we're seeing in the U.K. and the rest of our international business. This implies low single-digit growth in the U.S., while the international business contributes more than half of the total growth. And with these modest assumptions, combined with our commitment to drive productivity, we would expect to drive margin expansion return capital to shareholders and deliver high single-digit operating income growth, along with low double-digit earnings growth per share. The model works at mid-single-digit sales growth.

However, as you've heard this morning, our expectations are higher than that and the expectations you heard from the team add up to the high end of the range, the middle column on the chart. We'll do all of the above, but see opportunity well beyond that. will drive product development into new product lines adjacent to our existing portfolio.

And at the conclusion of this morning's presentation following Q&A, you're going to have an opportunity to see some of our exciting new products that extend the reach of our portfolio into new buying occasions. Both for new and existing customers. We further expect to see greater levels of sales productivity in the U.S., including through our go-to-market model that Stuart talked about this morning, along with our expansion of our distribution footprint.

We believe that drinkware can grow low single digits in the U.S. and the continued diversification that Hannah talked about will drive that growth. Internationally, we see incremental opportunities, particularly in our less penetrated geographies across Europe. Combine these growth avenues with higher growth expectations for the bags business, along with productivity and operating leverage, and we get high single-digit sales growth, low double-digit operating income growth and high teens EPS growth. Again, the model works.

As Matt outlined in the morning wrap up, our aspirations don't end there. Our product development engine is firing on all cylinders, and we see opportunity beyond our existing product footprint with new categories, new platforms, along with further extensions of our existing business. Globally, we have significant opportunities in scaled economies throughout Asia, the Middle East, Central and Latin America. None of this is included in the algorithm. There's a path to build into a double-digit growth over time. but the economics of the model don't require it. And that's why we're showing a mid- to high single-digit growth.

It's not a promise that every year will progress in a straight line, but we're committed to driving robust growth and growing profits ahead of sales. Delivering strong total shareholder return starts with sales, and we're modeling high single-digit sales growth. You then had the contribution from operating margin expansion related to productivity and sales leverage. We further had the impact from the deployment of free cash to share repurchases and will deliver low double-digit to high teens earnings growth per year.

As for the multiple, well, that parts up to you, but we believe this formula will deliver an attractive return profile for our shareholders. The logic is deliberate, multiple categories and geographies create sales durability. Scale and productivity allows earnings to grow faster than sales. The asset-light model supports strong free cash flow conversion and capital discipline then determines whether that cash is reinvested held for flexibility return to the shareholders through repurchases. The result is a credible path to mid- to high teens earnings per share growth. That's our TSR algorithm straightforward and repeatable.

So let's summarize the financials. Mid-single to high single-digit revenue growth, operating income growth of high single to low double digit, adjusted EPS growth of low double digit to high teens and cumulative free cash flow of $1.2 billion to $1.4 billion. So let's bring it all together. YETI has multiple, durable growth engines, both within the United States and international markets. We have a financial model designed to turn that sales growth into faster operating income growth through operating leverage and productivity. We have an asset-light model that generates cash. strong balance sheet and a commitment to repurchase shares.

Together, those elements create a clear incredible path with operating income growing faster than sales and earnings per share growing faster than operating income. The key is not any single number on this page. It's the reinforcing system behind the numbers. Brand strength creates permission to grow. Capabilities convert permission into sales productivity convert sales into earnings and capital allocation amplifies per share value. That's why we believe YETI can generate attractive durable returns for shareholders. That's the case. Clear, compelling and compounding.

I'd like to thank you all for your time commitment and for your interest in Yeti. We're going to take a quick pause while I invite my colleagues up to the stage so we can take your Q&A. Thank you very much.

Okay. Let's get started. So we have a couple of microphones around here. We'll take your questions, just raise your hand, and we'll come by and grab it right here. All right, Peter.

Thanks, guys. Yes, Peter Benedict at Baird. Thanks for all the information today. Super helpful. want to clarify. So the beyond the plan stuff, Matt, that you mentioned at the end, luggage, there was the apparel stuff, there was some international cookware. Are we to understand that that's the part of the outlook here that would maybe accrue to that low double-digit side of the algorithm. That's basically my first question.

Yes. So a couple of things. There's a lot of things in that low double digit if you kind of follow the line all the way through how you build up drinkware, how you build up international, some of those other things. The beyond the plan stuff is really all on top of that, but it's -- some of it's in the low double digit, but that's also some things that are out on the horizon. So you really -- as you think about the way Scott laid it out, he laid out the building blocks across products, categories, geographies newness, and that's really what we wanted to present today. So you understood that there's a lot of vectors of growth, as Scott talked about.

Yes. And my follow-up is just kind of on the -- I guess, the technical apparel. Who's leading that effort? And just maybe talk a little bit about your approach to inventory not thing, it sounds like it's going to be a limited launch, but just maybe build on that a little bit more.

Yes. So it is very early days in when we start thinking about the size and scale of it. And we talked about building into it, learning, as we've said, you'll see some things here in a few weeks. We have a small team in Denver that's actually working on that. the result of the work that you'll see in a few weeks is the work that they've been doing. It's led within our soft goods team. So underneath the parallel between bags, cut and so soft goods, really Denver is becoming the anchor point of that part of our business.

Phillip Blee from William Blair. So just building on that real quick. So you talked about a little bit just on the newer categories that you were talking about before when you went into cookware, bags, you did it through an acquisition, you think about luggage and apparel, technical apparel. I guess in order to scale or really expand those, do you think it would be necessary to take on another tuck-in acquisition.

Yes. No, let me kind of anchor back on today. Today is really about the primary things that you heard built up by this team and what they're underwriting. What we wanted to do at the end of what I want to do is give a vision to things that were already in flight that are additive for the future. But what you can take away from today is those things are, as you will see some of you in the room will see are in-flight by the teams we have that are on board that are yet. So we don't look at those as M&A necessarily. We look at them as organic builds.

Okay. Great. And then just quickly on the kind of wholesale opportunity here. I think you gave kind of quantified the number of Pro shops, I think, 6,000 available. When you think about just all the kind of specialty sporting goods stores out there, I mean, tennis running, cycling, can you maybe contextualize where you're at right now in those stores, where you would expect to be by 2030 as part of your kind of trend then any plans, I guess, to expand any national retail presence would be helpful as well. Thanks for the question.

So the example we used around green grass is really meant to 0 in on a particular opportunity. You can extrapolate that more broadly as we look across our consumers, our focus on consumer verticals. And what you'll find is that in any one of those consumer verticals, there's room for us to grow. It starts, first and foremost, with the partners we have. We have a lot of opportunity with our current partners, both in national and specialty to drive greater productivity in shelf space expansion, and that's where we're starting first. And at the same time, we do see opportunity for us to continue to grow in those zones and drive expansion. One of the things I love about Bill's presentation as he talked about the specialty model and how important that is for creating that depth in the discovery and the relationships there. So that's a really critical part and enables us to do that and then look for a broader national partners as we go.

Randy Konik at Jefferies. You talked about in the presentation slides, there was a slide that talked about that 20% of sales were driven by new products over the last 2 years. I guess a question for you, Matt, is how do you think about that if we were to say that same kind of dynamic or data point. 5 years from now or a few years from now, and when you think about the other in Europe, it was commented that 50% of sales from outdoor, 10% from sports, home 20% and work 20%. If you think about those 4 verticals, how, again, I guess, 5 years from now, when you think about the business orienting or changing for those different verticals than they've been in the past?

Yes. Why don't have Hannah take the 20% the vitality and then David can talk a little bit about the Europe split.

Nice to see you, Randy. So yes, on the vitality question, I'd say if I look about the 20% of 2025 revenue, that's largely been consistent in terms of our product vitality year-over-year. if I play it forward in 5 years, I would say that it will vary depending on the product platform that we're talking about. And so for some of our more established categories, that vitality will largely stay consistent in areas where we're really expanding such as bags and soft coolers, we mentioned a few other opportunities here. You might see that number go up quite a bit in terms of the revenue and the contribution there. But all of this is really balanced.

I think the other point that we made is really it's just a combination of 2. It's the vitality absolutely, and that is our innovation really working and driving and entering new occasions. But then it's also the longevity. And those are the products that are absolutely durable and that's durable trust and its durable revenue.

Yes. Just so just on the Europe perspective, I mean, we're in a phenomenal position at the moment in the sense that we've only really just got going, and we're only really in 2 verticals right now. We've got a these other 2, the work and the sports, we haven't really opened up. So that's a real focus for us, but we want to do it in the right way, the Yeti way that playbook way that we always talk about, about authenticating, going through specialty first and grounding it, getting those elites all on board. And we've got some amazing plans coming up. So I think the opportunity there is it's a projection that we've got, but the opportunity in across the region, not only within outdoor that we're currently at with the other 2 that I talked about that we're not in is just phenomenal.

And I guess my follow-up would be just again for Matt. Maybe give us some perspective or dimensionalize numerically in the last 1 or 2 years, how many new products have launched under the Yeti brand? And how did that compare, let's say, 3 or 4 or 5 years ago? And then how has that pace of innovation increased in the last 2 years, how do you think about that accelerating even further over the next 2 to 4 to 5 years ahead?

Yes. We'll -- I mean, we can go back and get you that number numerically. But I think what's obvious is the pace over the last 3 years has accelerated meaningfully, not just innovation within platforms we have today, but the expansion. You saw it, if you go back and review that slide, Hannah had, that showed the buildup of where we were to where we are and where we're going from a platform build-out. It's been unbelievable. And really coming on the back end of a lot of supply chain, a lot of access to our development locations and our manufacturing partners in that [ 2021 ], '22 period. I think what you've seen since 2024, 2025, year-to-date in 2026, is that continued acceleration. It's the result of this team, this work, the way we organized our team around the 3 focused product groups.

But if you go back and look at that time when that acceleration started, and you rewind 2 years, it was really coming out of that disruptive period. We came out of it shot out of a cannon. And we're continuing to build into that. that 2 years was about the product development time, plus or minus, depending on what the product category is. And so you got a couple of things. You've got the acceleration you've got what Hannah talked about, which is the continued process improvement that's shortening the development time. And then you add in the commercialization and go-to-market work that David mentioned and Stuart are leading. And that's how you build that compounding thing.

We're at a point now where we can create plenty of product. And there's ideas beyond, and we'll talk more about that a little bit later. But what the commercialization engine catching up to that, that drives the durable growth and then they both end up challenging each other, innovation challenges the commercialization execution, the commercial icon execution and the segmentation creates more opportunity. And that's where we feel like we're really kind of stepping into our rhythm and momentum there.

Joe Altobello with Raymond James. A couple of questions on the margin. If my math is right, it looks like you're looking at a 2030 operating margin of about 16.5% to 17%. So you talked about the $100 million of cost savings I imagine operating leverage is part of that expansion as well. But what the big drivers are there? And maybe secondly, on the $100 million, how does that scale over time? Is it sort of ratable? Or is it back-end weighted?

Yes. Look, great question. Thanks for the question, Joe. We have the benefit of having really healthy margins and they've proven durable over time. And so we're starting from a position of strength as it relates to our margin profile. We talked about project up cycle through accomplishing 3 goals. So one is funding the growth that we talked about today. We have significant ambitions to continue to fuel the growth of the business.

Second, which is there are minor mix shift elements that come along with some of that growth, not as much as you might think, but this -- we think this would sufficiently cover all of that. And then third is to expand margins. We kind of think about that 3-layer stack as an objective as the use of funds from the source of funds delivered from the productivity that we're driving.

And just to be clear, I just want to go back to the program. This isn't an idea. These are projects that we started a while back. They're in flight. We're seeing results already. It's going to build over time. have kind of laid out specifically the ratability of that. It isn't kind of one big item. It's spread costs, dozens of initiatives some of which are quick turn, others which are a little bit more complex and take longer to execute. So think about that spread out throughout the duration of the time horizon that we're conveying here. But we're excited about what it does for this business, the opportunity to have the healthy growth that we saw in the presentation this morning. Combine that with operating income growing faster than sales. in EPS growing faster than operating income. We feel like this is a really good formula for success for the shareholder.

And we're going to generate a bunch of cash.

Peter Grom from UBS. So Hannah's presentation gave a lot of facts around the opportunity with existing consumers, right? But I think there was a number of numbers given out that what the sales could look like if you converted those with consumers that resemble the YETI consumer. So I'm just curious why it's been harder to convert those consumers? Is it awareness? Is it competition? Is there something about the brand that's misunderstood. It just seems like it would be a pretty significant opportunity if you just convert a small portion of those consumers.

Yes. Thank you for the question. I think there absolutely is an opportunity for it. I mean we see it now and currently what we're doing and where YETI is already being invited. You've heard about several of it in not just new markets, new channels, But then I would point to where we do have opportunity, and that's to intersect more of these consumers of where they are shopping. We have a much more broad-based portfolio growth platforms where I think our distribution expansion and driving the awareness and product discoverability of our platforms are absolutely the opportunity. And so if everything build shared, what's incredible is honestly just the consumers, those who are in the 60 million U.S. households that look like existing YETI owners. We view that as an incredible opportunity. We're already getting after it, and it's only going to get amplified by a lot of the commercialization engine that Matt just talked about as well.

Yes. I would just add one thing. If you combine what Bill talked about with the audience expansion, moving into sport, what Hannah talked about, more moments, more times. Stuart talked about the commercialization engine and how you intercept with the consumers. You tie all that together, the fundamental when people say, why not more faster is I don't want 1 transaction. It's not about selling 1 cup. It's about moving people up those quartiles. And when you look at that top quartile and the value of that top quartile and what it continues to do from a product discovery, a deepening of ownership. And then when you take what Hannah said, which is part of moving people up quartiles is time and when they get there, they're sticky.

And then you look at the loyalty that Bill talked about, and the opportunity that's been expressly given around bags. I mean all those things, each of those elements is important. And so -- it's not about a transaction. It's not about a short-term moment. This is about how we continue to build durable long-term relationships because they're the ones that are going to buy into the next thing we do.

Good morning, Andrew Didora from Bank of America. I think, Stuart, you spoke in your prepared remarks about, I think, Texas was 40% of revenues years ago. I guess when you think about your U.S. sales today, kind of what percentage of that important kind of southern U.S. market does that represent? And then I guess more importantly, going forward, when you try to penetrate those sort of Northeast urban markets that you under-index to today, is there anything you need to do differently from a commercial or marketing perspective to grow share markets.

Well, thank you. Yes, I go back to where Matt started the presentation earlier. I took it as sort of real-time feedback from my boss around the thing that annoys them the most is when people say they didn't know YETI Meda and I take that as my mission to make sure that, that doesn't happen. I know Bill feels the same way. And so when you look at the U.S. specifically, you're right, we've got incredible. We born from Texas, incredible strength in the Southeast, and there is opportunity for us in the Northeast.

I'd say in the West and other regions. So I see that as opportunity for us. And that, again, that comes back to our deep focus on consumers, understanding where they shop and understanding the opportunity that we aren't currently serving through our current channel partners as well as potential ones down the road. We have opportunity with consumers in the Northeast and younger consumers. We now have a store on Newbury Street in Boston, that is a great beacon for discovering the full portfolio of the YETI brand. So we're going to be very thoughtful and surgical about first and foremost, the partners we work with and then how we amplify that and complement that with our owned destinations.

Great. And then maybe a second one for Scott. When you think about the long-term sales, Algo, how do you think about maybe the split between volume and price? And do you expect to be taking more price in kind of that 2030 estimate out there?

Yes. We're not going to specifically disaggregate those 2. But generally speaking, we take price very selectively. We are very thoughtful on the front end when we launch products and what the right price is for the market. It's something we assess on an opportunistic basis. But we don't expect that to be a huge driver. This is about driving volume. All those areas of access going deeper with existing customers, reaching new customers, reaching new geographies, extending the platform into new growth vectors. That's what's going to drive yet in the future.

Peter Keith with Piper Sandler. Really good presentation today. I appreciate all the insights. I guess on the marketing side, you have sort of -- you moved into top of final TV advertising over the last year. I'm curious if that's something that we should expect to continue to kind of activate some of these new customer opportunities. And I'm also intrigued with the 450 events that you guys do annually. Is that something as you move into more and more activities, we should expect that number to go higher?

Yes. Thanks, Peter. definitely as far as the upper funnel, we've identified that we need to tell more people what this brand stands for. So I think you saw that drumbeat start in Q4, and it's started with the spring campaign. And I think our plan is to continue to do more of that at the right times in the right moments of the year. As far as events are concerned, we know showing up is something we're going to continue to do. And so on a global basis, we've got to be in the communities. And so as we scale, I would assume that number will probably go up, but we sort of analyze the impact of all our events that we do on an annual basis and we like where it's at right now, but if it means we show up more, we will.

Okay. Great. Other question for me. I guess, for Matt and Scott. So if we go back to November, you guys did have a different sales target, which was high single digit to low double digit. I actually like this target mid-single to high sell better. I think it sounds achievable. But what changed in the last 9 months. And I maybe appreciate Scott's also in the room here?

Yes. I'm thrilled to have Scott in the room here, too. And I hope you saw that today. I mean to command. And I'll just give Scott, I mean Scott stood up and opened up the international section. -- his command over the business. He's command over the growth opportunities. So I'll do a little Scott. It's a little Scott advertising. But -- and I would welcome him to William on the back of this.

I would say a couple of things have evolved. The world continues to evolve, and we recognize that. We also recognize the importance and if you really sit back and look at Scott's slide of the building blocks, what we wanted to do is show each of the building blocks in what you had to understand and believe and underwrite as you work up through that algorithm. And make no mistake, there is opportunity all the way through it. But if you go to the far left of that, what do we say?

No U.S. drink or growth. I know somebody too to my left is not -- if you got anything from Hannah part, there's no concern that she's going to be driving our home and hydration business. It said modest growth in the U.S. It said good but not great growth in bags and soft coolers and then build it up and then you get all the way out to the right. And the things on the right aren't bet on moonshots. It's everything getting a little bit better and then some newness.

And I think if you go back to the question earlier, when I joined YETI 11 years ago, September and said 40% of our sales came from the State of Texas. We're not a Southern U.S. company. Our brand is all over the U.S. It's all over the Americas. It's all over Europe. It's growing in Asia. It is -- I mean, you saw the indexing in Australia. I mean we're an Australian brand in Australia, but known for all the things that YETI makes.

So I think when you look at that that's really Peter, why we wanted to step back in this time and use a chance to say, you can work your way up that model. And as Scott rightly and importantly pointed out, it all works underneath the growth. And so -- if you take anything away from this team, it's a belief in this brand, it's the systems that we put in place, and it's what this brand can do with the people, the systems in this brand, and that's what gets us excited.

Anna Glaessgen from B. Riley. Curious on -- if you could share more perspective on the outlook for U.S. Drinkware the decision to set the baseline at flat. Is that in line with the market? And to get to the higher end of the range, does that assume using competitive pressure, market performance or and/or accelerated innovation.

Hannah, maybe take the strategy side, and I'll come back and talk about the building blocks in the algorithm. .

Yes, absolutely. So I believe the question was a little bit more about the algorithm and just contextualizing U.S. Drinkware. So I think as Matt brought up in the beginning, there's absolutely some incredible energy and growth that went into the category a few years ago and then some challenges that have emerged from that. I think what's incredibly exciting to us, though is, again, we really thought about how are we continuing to expand use occasions, audiences, our innovation pipeline in terms of creating those new occasions because consumers don't buy another cup just because we want them to. That's actually what we're focused on is really the longer-term strategy that we set today, which is -- if you solve a real problem need, you have a differentiated point of view, you tell people you have those products and let them discover it and interact with it. that ownership grows in the multiples of the stackables you see in front of you and that advocacy grows. And so I'd say, in terms of U.S. drinker in the same way we think about international drinkware, the opportunity is massive.

Something I'd just say maybe more broadly about the left side of that page and the lower end of the algorithm. If this group is sitting here in 2030 and we look back and that's what we delivered, we would be significantly disappointed you heard the passion and the energy and the conviction from the team today. And so again, we wanted to articulate what -- how the economic model and our commitment to expand margins even at the low end of the range is in part of the thesis that we're putting out here today. But I think the U.S. drink were flat.

You look at the diversification, the extensions of the platform, all the incredible work that Hat and her team are delivering, we would be disappointed with that result. We absolutely think there's opportunity to grow that platform. It was just meant to again share the articulation of how the model works even at the low end of the sales guide.

So my math says this is the first time in the company's history, you've ever grown mid- to high single digit being 2026. It's always been over or below. And so is there -- look, it appears from what you've conveyed today that there's enough diversification by region, by product that the ways to win are within your control such that as you've talked about, there's a much higher likelihood of being predictable in the go-forward outlook. So just sort of curious if that's a reasonable takeaway and what isn't in your control that could cause you to end up in that 2030 disappointment, but not due to execution or things you could control?

So maybe I'll take the front of that and Scott can dream about things outside of our control and maybe take that on I think there's a few things when you think about scaling to $2 billion and then where we go from here, which is really what we're talking about. We're talking about the platform we are today to what's going. And the international opportunity is incredibly compelling. I think you heard that today. And it's not just because they are big international markets, there are big international markets where YETI has relevance, where our product is, as you earlier, has product market fit.

And so all those are growth drivers. I think the thing about the U.S. market is since I -- since my first day at Yeti, I heard can you sell another cooler. Like how many hard coolers can people possibly want? How many cups can people want. I think what you heard from Ana today was our top quartile owns 14 YETI products. And we're creating more products for more occasions and more use cases and surrounding people's lives. And the one thing I've always wanted for this brand is I don't want this to be a pick up and put down brand. I don't want it to be a brand for the moment. I want to live with you through your day. I wanted to live her you through your week and through your month in all your activities.

So whether that's the backpack or the drinkware or the cooler with the lunch box to the protective cases to a branded Yeti hat. That part is of the brand, I think, is the opportunity, which continues to drive the growth. We're also cognizant of where we are right now in the cycle. And I think what we wanted to make sure it was clear today is the multiple vectors of growth and the multiple vectors for driving the profitability and the shareholder returns in this business, and this gets to -- because we can't predict what the next 3 to 5 years has. We could have predicted the last 3 to 5 years.

It's not like the last 3 to 5 years has been the smoothest sailing in the market. I mean it's been all kinds of challenges. And I think the resilience of this business when you zoom back from the near term, and I think sometimes we get too focused on the near term, the short, you zoom back and you look at the strength of what this business has done for 20 years. It's unbelievable. And that's what gives us the confidence in the motivation to where we're going next.

No. Well said. I mean we thought about this as kind of a durable evergreen algorithm. Certainly, there's always the risk of external shocks to the system. But I think as Matt mentioned, the business has proven to be resilient, has an attractive consumer segment. And the diversification is an important part of the strategy. We can have a competitive dynamic with the SKU here there, an item here or there or a geography. And we have the durability to withstand that and continue to be successful and continue to evolve. And that's why we think the power of the diversified model that we're putting into place can drive that reliability and sustainability over time as the business has proven to do so in the past.

Peter McGoldrick with Stifel. Scott, I wanted to ask about the 3-layer stack related to the project up cycle. Specifically, the mix dynamics, you said there wasn't that much. But as you think about what's embedded in the guidance. Can you help us think about the puts and takes on a channel, region and product framework?

Yes. So look, we laid out the 3 blocks. I'm going to maybe stop short of kind of giving you detailed kind of basis point walks from each of those. But Again, going back to the diversified business model, I think that is one of the incredibly powerful things that we talked about today. There's always going to be a product here there that has a higher margin than another. We're really excited about what we're seeing from our international businesses. the mix that we're seeing there is accretive to overall enterprise performance.

The mix dynamics that I described largely sit within SG&A, not entirely, but largely so. And so we directly targeted those cost of goods improvements, trying to blunt any potential mix impacts that we'll see there within cost of goods. But again, we are committing to do 3 things all at once, right, which is grow the business invest for the future and return capital to shareholders and grow earnings per share faster than operating income and faster than sales. So we think that, that funding mechanism, the source of cash being project up cycle allows us to be successful across all those dimensions.

And then just one follow-up there would be on marketing as a percentage of sales, 7.8% last year. As we think of the efficiencies from project up cycle, is there an opportunity to go higher in that mix? And how should we think about the dollars being redeployed into marketing?

So look, you heard a lot today about the brand. Marketing is an important element of what we do, and we're going to continue to invest in that. And that's why we talked about that brand building is one of the key investments for the business. And so -- but that doesn't mean we don't hold the marketers bill accountable and Stewart accountable to being judicious with every dollar, making sure we get the highest impact possible. And that means constantly evaluating the return on investment from the brand building and even the more direct kind of paid search and other activities, constantly maniacally focused on the mix of that marketing spend, and we're going to continue to work on that, and that is a big part of project up cycle to making sure we're getting maximum impact for the dollars from the dollars we're spending. Do not expect to see leverage out of the marketing line. That's not our intent to do that.

Matt Koranda, ROTH Capital here in the back. Thanks for the day. It's been really informative. I guess we heard a lot about how you build authenticity through the communities that you're working with and a lot about the new product. where we didn't maybe hear as much was about how you keep the brand relevant for a younger consumer. I heard a few points that may be alluded to that. But maybe this 1 is for Bill. Just how do you keep the brand fresh and relevant and as you look to the next generation because I think Vets like I'm a core customer, but I'm a middle age guy. How do you sort of attack that younger consumer and make sure you're accessible to the consumer? And then what's built into the outlook from an acquiring younger consumers perspective?

Yes. No, thanks for the question. We think about that a lot. I mean we're 20 years old. Our initial customers are probably in their 30s and 40s, and now they're my age in the 50s and 60s. And so we know we got to get younger and our consumer insights will tell us that we are getting younger and younger people are adopting our brand. But when we look at the communities, like for sports is a big one for us. and the athletes that are playing in high school and in college. That's why we did sign Charlotte North. And if you're in the lacrosse of, she's an ambassador of ours. And Michelle Cooper, if you watch women's soccer, she's an ambassador of ours, he's on the U.S. Women's National team. And so as we get into more of that sports space, it's funny like we're fishing, it sometimes influences up. People who have hobbies and passions. Sports influence is down. And these younger consumers are just seeing what their heroes are using, and we see that as a real growth path to that, both on the female side and the male side.

And then maybe for Scott, I guess the -- you have strongly suggested that maybe the potential is toward the higher end of the range that you provided on the top line. How should we think about how operating leverage skills, if you get to the high end of that range, what's possible, I guess, if we just run the midpoint, it's sort of 50 bps of margin expansion each year for the next 5 years. But how should we think about operating leverage at the higher end of the range?

Yes. Great question. Yes, certainly, if we're at the higher end of the range, it does produce a little bit more operating leverage. We do have a meaningful portion of our cost structure is variable in nature where we have delivery fulfillment costs and those kinds of things. but there is additional operating leverage. And if you -- when you guys get back and work on your model, if you look at the earnings per share and the operating income growth we're showing in the low end of the high end, you're going to see the delta there between that. We really isolate the amount that you're asking about.

But yes, there's absolutely incremental operating margin expansion if we trend towards the higher end of the range. And we feel like that's an important upside. Trending to the higher end of the range could require more investment, though, right? And that's part of it is there is -- yes, there's operating leverage, but there's also driving that level of activity. We'll take investment to get there. And so it isn't a perfect flow through there.

it's Brian McNamara from Canaccord. I hear you took my question on the kind of reaching the younger consumer, so kudos to him. But my second question is, I think, Lane, you mentioned bags and coolers were $390 million last year. I'm assuming soft callers. I'm assuming software the big chunk of that, but the question I get asked the most is how big is your actual bags business...

So let me take that one, if you don't mind, Brian. So the bags business is a little less than 40% of the overall bags and soft coolers combined in 2026.

Jason Bender from Citi. I was really struck by one of the slides you put up, which showed the accelerating pace of growth in each of the new international markets you entered with each one being faster than the last. I think the last one in Europe was down to 3 years you said. Could you maybe frame how you think about that time line for new barkets where you're going direct and those where you're going indirect? And maybe provide some guardrails on how you think about when might be a good time for those markets where you're going indirect to either transfer the business back to a direct model?

Yes. I appreciate calling out that was -- I think Scott admitted, I was his favorite slide in the deck, too, as we kind of went through that. My quick answer is when you get Mitch and David on board, good things tend to happen faster. Some of those early markets, like you do, we ran out of Austin, and we built it up remotely. I think what you're seeing with the scale in Europe and I think you see in Asia putting YETI people into the market who know the market, they understand it, they know and they can pull from Austin from the gold business. And I think we're seeing that with Mitch and Tokyo as we expand throughout the region. And I think we're seeing it with David across the U.K. and Europe.

As we go forward, I think that growth will continue in what we would consider primary markets, markets where we think there's a sizable enough opportunity that the investment and the upside makes sense, we want to be direct in those markets. So David called out the U.K. in the dock region. Mitch talked about Japan I think the markets that we consider kind of right behind that, which we think could be direct markets, but doing a little bit of the prework, get there faster, start to scale it up. Those are markets where we've targeted some partners to help us get going.

And then the third market or market -- the third tier is really markets that we think are going to be most efficiently served through an indirect model. We think it's the most efficient way to meet that kind of third range demand. I mean, when we started in the U.K., we brought in some infrastructure and some partners. We started in the rest of Europe, we did got that going in the first couple of years. When you saw that hockey stick as we really came out of COVID, we transitioned that business to being a direct sub.

So we've got opportunity and we have skill set across all those different models. The hard and fast when it's big enough to bring direct really comes down to what do we think the long-term potential is and is the direct investment worth it. But that's a constant evaluation we do.

We have time for 1 more question.

Thanks for the time today. I wanted to understand a little bit better when you talk about that core customer, the top quartile customer. What's the life cycle of that customer that gets them to those 14 products? And is there a way -- or I guess, I'm sure you guys have looked into how to graduate the tier down? The tier below that to the upper tier. Just trying to understand the repeatability of sales and how you can sort of bring more repeatability into sales of our core to your core customers?

Yes. No, it's a great question. And I would say the answer is complex but broken down in the focus you heard today. So we know customers multichannel shop. So sometimes it's direct, sometimes it's through some more incredible partners, sometimes maybe through a B2B or a marketplace. So recognizing that, one of the things we do is make sure we're everywhere people want to shop and where yet it makes sense. -- that range of places keeps getting tested as our innovation continues to expand with this team that creates that opportunity to buy more. I think the other piece is ownership will continue to evolve. As we continue to bring more and more products out that are relevant to people's lives across the pursuits and activities that Bill's team is working on.

So it's -- since we have that strong omnichannel, which we consider both powerful, unique and an incredible asset for us. It's not as kind of straightforward as bring somebody direct, get them to buy a second, give them buy a third. It's really about how do we make sure we're showing up with product that's relevant. We're telling relevant brand stories. We're in the right communities and driving that desirability of not the collectibility of YETI, but the true ownership where it becomes part of their lifestyle. And that's more what we're focused on than trying to kind of drive certain behavior across a certain channel for a certain value.

But that lifetime value, that time comment that Hannah made is real, and it's important that as people build into this brand as they buy cross-category as they buy multiples, the deepening ownership. And I don't want to lose one of the stats in there that as we've evolved from being this kind of Southern U.S. brand to a national brand to a global brand, that referral rate that Hanna talked about for a decade, the product portfolio has expanded a lot. The price points have changed. The communities we talked about a change, but that stayed true. And I think that speaks to the resilience and the power of what this team is building.

Okay. So that concludes the morning session here. For those that dialed in via the webcast and for those here in person, we'd really like to thank you for your interest in YETI, and hopefully, you got a feel for the incredible passion and conviction that this team has about the growth prospects for this business and our ability to continue to deliver strong shareholder returns. So thank you again for the time commitment.

The buses will leave for the innovation center at 12:45. We have lunch available for the folks that are here in person and the lobby out here, and there's also some terrific new product development displays out there that you can take a look at and we'll have some of our product leads out there and available to answer some questions. So thank you again for all your interest in YETI.

Good morning, ladies and gentlemen, and welcome to the YETI Holdings Second Quarter Fiscal 2026 Results Conference Call. [Operator Instructions] This call is being recorded on Thursday, August 13, 2026. I would now like to turn the conference over to Arvind Bhatia, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us to discuss YETI Holdings' Second Quarter Fiscal 2026 results. Leading the call today will be Matt Reintjes, Chairman and CEO; and Scott Bomar, CFO. Following our prepared remarks, we will open the call for your questions.

Before we begin, we would like to remind you that some of the statements that we make today on this call may be considered forward-looking, and such forward-looking statements are subject to various risks and uncertainties and that could cause our actual results to differ materially from these statements. For more information, please refer to the risk factors detailed in our most recently filed Form 10-K. We undertake no obligation to revise or update any forward-looking statements made today as a result of new information, future events or otherwise, except as required by law.

During our call today, we will discuss certain non-GAAP measures. We use non-GAAP measures in certain context as we believe they more accurately represent the true operational performance and underlying results of our business. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release or in the presentation posted this morning to the Investor Relations section of our website at yeti.com.

I would now like to turn the call over to Matt.

Thanks, Arvind, and good morning. We appreciate you all joining us today. YETI's second quarter reinforced the strength, resilience and breadth we are building across the business. We delivered nearly 9% top line growth, operating margins and EPS that exceeded our expectations and we executed $130 million in share repurchases in the quarter, which brings our total since 2024 to over $600 million, reflecting our focus on returning value to shareholders through the strength of our balance sheet and free cash flow generation. But what I want to emphasize is what Q2 continues to tell us about the business structurally. The business today is poised for scale. It's broader, operationally sharper and better equipped to win through uncertainty than at any other time in our history.

Despite an uneven consumer backdrop with pockets of caution, value-seeking and ongoing macro uncertainty, YETI's customer is showing up as the brand broadens our product platforms expand and the team continues to deliver. That progress is not accidental. It reflects multiyear investments in brand, innovation, commercialization and global capabilities that are now driving the model.

Scott will walk through the financials and our outlook in detail, so I'm going to focus my time on what matters most from an investor perspective. What we are seeing in the business, why we believe the underlying demand signals remain healthy and how we are positioning YETI to accelerate growth and generate durable returns over time. I'll start with 4 key takeaways from our second quarter. First, brand momentum continues to build, deepening our connection with consumers and driving increasing efficiency in our investments. In Q2, our national brand campaign, 4 letters, brought YETI to life through a powerful showcase of the pursuits and passions of our brand. It gave us a scalable platform to express what and who YETI stands for, one that strengthened awareness, expanded the brand's reach to new audiences and reinforce these relevance across consumer groups.

We showed up in premium programming as well as digital, social and outdoor environments, including a presence in major live sports, highlighted by the most watched NBA finals game since 2016. We paired that reach with our active and deep presence, local activations across core and emerging communities around the world, reinforcing our brand continues to be rooted in culture, people and real-world use. This balance is important. Scale without credibility and trust is expensive. Credibility and trust without scale is limited. YETI is delivering both. We could appear on the biggest stages, and we also show up on the trail among pit masters at a surf break on the fence of a rodeo and walking the team. That breadth is who we are and what we do and increasingly plays a role as we expand our innovation into more use cases, more geographies in more everyday moments.

Strong engagement across our digital ecosystem and wholesale partners reinforces our confidence that the investments we have made in brand building and storytelling are strengthening consumer connection and that brand efficiency is a compounding advantage.

Second, innovation continues to drive the expansion of our product platforms across a wide range of product families. Our second quarter performance demonstrated that our brand is building upon our hard cooler and drinkware legacy into more platforms across soft coolers, bags and protective cases that increase daily use and reliance. We are a brand that travels with the consumer through their day and through their week. That platform breadth gives us resilience and opportunity. It means growth isn't tethered to a single product cycle, channel or geography. Consumers continue to respond to YETI's durability, design and performance across categories. The combination of brand trust and product credibility is a strategic advantage, and it's what gives us staying power and allows us to enter new categories with relevance.

Our Daytrip insulated bags are a great example of platform expansion, Camino toaster another, where product momentum continues and the recent launch of the Camino Zip brings new sizes and additional functionality to an already strong product family.

We also saw continued strength in smaller, more personal-sized heart coolers with the Roadie 15 performing well and Roadie 8 generating positive early consumer response. In cases in storage, the GoBox family continued to build momentum across both consumer and professional use cases. As we have said before, there is more to come here, and we're excited to see where it goes.

In Drinkware, we've been clear over the past few years about YETI's strategy to drive innovation and broaden our assortment across the platform. To put the category in context, we expect a roughly 600 basis point drag on our U.S. Drinkware growth in 2026 from 3 primary SKUs, all tied to the well-publicized but narrow, trend-driven momentum and share swapping that has played out in the category over the past few years. That is a significant headwind, but it has been more than counterbalanced by strong execution of our diversification and innovation strategy across the rest of the platform. This is why we continue to show overall Drinkware growth versus what this significant drag would otherwise suggest.

The products driving the headwind will largely complete their lap by year-end, resetting the base as we head into 2027. We continue to be very pleased with the underlying performance of the Drinkware platform, not only new innovation, but also some of our longest-standing models within YETI Drinkware. That reinforces our view of the durable opportunity in front of this category domestically and globally. The partners who have embraced our broad portfolio are seeing the benefits, outperformance, new consumer reasons to buy and stronger merchandising. Our product-led expansion has not only benefited yet YETI's U.S. Drinkware, but continue to drive opportunity globally.

We're focused on breaking away with innovative products that address new occasions and consumer needs. Hydration remains the growth engine supported by core straw bottles, rambler jugs and stackable cups and core tumblers continue to validate everyday utility. While food storage, our beverage buckets, rambler bowls and carbon steel cookware demonstrate YETI's expanding opportunity in the home environment.

Third, our omnichannel strategy continues to drive balanced and durable growth. In wholesale, we delivered another quarter of strong year-over-year sell-in and sell-through. This performance reflects continued support from our retail partners as they expand their commitments to the broader YETI portfolio and lean into the brand's momentum. Our wholesale approach hasn't changed. Premium positioning, healthy inventory and long-term shelf productivity. Our tracked channel inventory exited Q2 down, continuing the trend that we have communicated in the past, reflecting a healthy demand-driven channel.

Within D2C, demand remained strong across e-commerce, Amazon and YETI stores, with corporate sales delivering meaningful improvement versus the first quarter trend. We continue to see untapped and scalable near- and long-term global opportunity in this channel. Fourth, international remains a significant long-term growth opportunity, and we're deploying our disciplined market-by-market approach. Europe delivered strong year-over-year growth with momentum across both digital and wholesale channels as well as continued door expansion. What is particularly encouraging is the increasing breadth and diversity in the European markets with growth across drinkwear, hard coolers, soft coolers and bags. We are building awareness, localizing YETI playbook and maintaining premium positioning. Our recently opened pop-up store in Munich is a strong example. It sits in a premier high-visibility location, brings the brand to life through storytelling and service and has already drawn consumers willing to travel meaningful distances to experience the brand.

Asia is still early in its journey, but the progress is there. Japan in its first full year as a direct business delivered significant growth in the quarter. We are also advancing our expansion plans for Korea, China, Indonesia and Taiwan, and by the end of 2026, we expect to be live in 11 markets compared to 4 at this point last year. These are still early stage contributions, but the consumer response reinforces our conviction in the long-term international opportunity.

In Australia and New Zealand, brand strength and focused go-to-market execution supported a strong Q2 growth even as macro conditions in those markets remain challenging. In Canada, growth was positive but weaker as healthy D2C performance was offset by softer-than-expected wholesale sales despite strong underlying consumer demand and sell-through trends.

The big picture internationally is this. YETI is still in the early innings of a massive opportunity. Our brand can travel, our product platforms resonate, our international playbook remains the same, right assortment, right distribution, localized activation, disciplined investment and Q2 has proved that it translates across geographies.

Turning to operations. Our supply chain continues to respond well in a complex and dynamic environment. We are managing the significant impact of oil markets, raw material cost pressure, ocean and parcel headwinds and shipping delays across certain Asia trade lanes. We've taken proactive steps to reduce risk, including qualifying additional raw material sources, further diversifying our supply chain and scaling our structural enterprise productivity programs.

We continue to invest in capabilities that strengthen our innovation engine and support long-term growth. Our global design and development network, now spanning 5 locations, is delivering a faster innovation cycle and a deeper pipeline than we had even 12 months ago. These investments are helping us prototype faster, collaborate more effectively with suppliers and accelerate the pace at which we bring new ideas to market.

We're also investing in digital and customization capabilities. Ranger, our AI-driven shopping assistant, continues to improve conversion and engagement. Our board customization, a new enhancement to our yeti.com customization platform is enabling multiple graphics, logos and text within a single design experience. These are exactly the kind of capabilities that make YETI more personal.

Stepping back, Q2 reinforced several important themes about where we are as a business, brand power compounds as YETI becomes a trusted companion across more parts of consumers' lives, whether sports, community, travel, home, work, outdoor gifting or everyday routine, the brand's relevance and long-term value continues to grow.

Platforms matter. Daytrip, Camino, Roadie, GoBox, Stackables and food storage are not isolated products. There are scalable ecosystems that create repeat behavior and expand our addressable market.

Diversification is working. We are not dependent on 1 moment, 1 product, 1 channel, 1 customer or 1 geography. Wholesale, D2C, marketplaces, retail stores, corporate sales and international, each play a role. And together, they create a more resilient, more durable business. And discipline matters more in this environment, not less. Consumers are intentional, retailers are selective, input costs are fluid, category competition is dynamic. This is exactly when brand strength, product credibility, inventory discipline and operational execution separate the strongest companies from the rest.

Before I turn to the back half of 2026, I want to give you an early look at our upcoming Investor Day on September 17 here in Austin. We're looking forward to hosting investors and laying out the next chapter of the YETI growth story. Let me give you a sense of what we plan to cover. First is brand. We are earning our spot in more places in more moments. This is not a tagline. It's what's happening in the business. The brand is showing up in new geographies, new communities and new daily routines and doing it with credibility. We will show you why we believe the breadth of YETI's brand relevance is durable, differentiated and still very early in its reach.

Second, innovation. Our innovation engine is built to solve problems, not chase trends. We design for durability, performance and real-world use, and that is what earns us the right to expand into new categories. We will walk you through the capability of our global innovation centers, the conviction in our pipeline and why we believe the next wave of product platforms will be as impactful as those that built this company. Third, commercialization, right product, right place, across DTC and wholesale and increasingly around the world. We're focused on shelf velocity, expanding positioning and opening new doors globally. Great innovation only compounds when you commercialize it well, and we will lay out how we plan to do that. Fourth, on the horizon. Add together a powerful brand, a global innovation engine and a disciplined commercialization model and the permission and opportunity for meaningful category expansion becomes very real.

Fifth, a powerful financial model. Multiple durable growth engines, disciplined capital allocation, a clear credible path to outsized EPS growth leads to a financial model built to compound. That is a story we're building, and we're looking forward to telling it. Looking ahead, we have significant runway in front of us. In the back half of the year, we will continue to build around clear growth platforms soft coolers bags, cases and storage, personal hard coolers, hydration, custom and international expansion. We will support the business through key consumer moments, including a series of fall efforts and ultimately Q4 holiday gifting, and we will continue to bring innovation.

The underlying health of the business remains strong, the brand is expanding the product portfolio is broadening the channel model is more balanced, international scaling and the operating system continues to improve. YETI is a brand-led platform business powered by authentic consumer demand strengthened by disciplined innovation and scale through a diversified global omnichannel model. That is what gives us conviction in our ability to grow through cycles, protect the brand, expand margins over time, generate strong free cash flow and compound value for shareholders.

I want to close by thanking our partners around the world and especially the YETI team. The second quarter reflected a tremendous amount of work from product and brand to sales and operations to our retail, digital, international and corporate teams. We are building YETI for the long term, and we're getting stronger every quarter.

With that, I will turn it over to Scott.

Thanks, Matt, and good morning, everyone. Thank you for joining us. I'll begin with our performance for the quarter, after which I'll provide an update on our outlook for 2026. We look forward to taking your questions following my prepared remarks.

Before I get into the details, let's talk about what I believe are the most important themes for the quarter. We delivered another period of broad-based growth, with sales increasing 9% across categories, channels and geographies, underscoring the strength and resilience of our business. At the same time, our gross margin performance continued to improve, reflecting strong operational execution. This execution, combined with the momentum we're seeing across the business and some OpEx timing factors I've discussed before, supports our expectation for meaningful operating margin expansion in the back half of the year. As a result, we're raising our full year operating margin outlook. While the quarter benefited from refunds associated with EPA tariffs, the broader tariff and inflationary pressures remain a headwind.

Our teams are actively focused on mitigating these pressures by driving productivity while continuing to invest to drive long-term growth.

We also remain disciplined in our approach to capital allocation. We executed $130 million in share repurchases during the quarter, demonstrating our strong commitment to prioritizing shareholder returns. Overall, the quarter reinforced the strength of our operating model and our confidence in delivering our 2026 objectives.

With that, let's dive into the details. Our second quarter results highlight the continued momentum we're seeing in the business, reinforcing the power of our diversified model and the strength of our long-term growth strategy. Starting with our overall top line performance. In the second quarter, we delivered sales of approximately $484 million or growth of 9% year-over-year. We saw broad-based growth across categories, channels and regions, supported by strong consumer demand.

Turning to our performance by category. Coolers & Equipment sales grew 16% to $232 million, driven by strength across bags, soft coolers, cases and storage and outdoor living. Innovation continues to resonate with consumers across channels highlighted by our Daytrip and Camino lines where demand was robust.

In Drinkware, sales grew 2% to $241 million, our third consecutive quarter of growth in the category. Growth was driven by momentum across international markets and strong innovation.

In the U.S., our Drinkware sales were flat amidst continued Drinkware market pressure and competition. However, in consumer demand for YETI Drinkware remained healthy, increasing mid-single digits in the U.S. during the quarter.

Looking at our performance by channel. Sales in the wholesale channel increased 10% to $218 million, driven by strength across the U.S. and international markets. Sell-through in the wholesale channel was robust and channel inventory remained healthy, positioning us well for the back half of the year.

Direct-to-consumer sales increased 7% to $266 million, supported by continued strong demand across marketplaces, e-commerce and YETI retail stores.

Speaking of YETI retail, we're pleased with the consumer response to our 2 new store openings in Boston and Atlanta during the quarter. Corporate sales declined slightly year-over-year, but improved markedly from the first quarter. Demand in the channel appears to be stable, and we expect continued improvement in the back half of the year.

Moving to our performance by region. In the U.S., sales increased 6% to $391 million, driven by growth in Coolers & Equipment. In terms of channels, we saw a robust demand in the wholesale channel as well as across marketplace and YETI retail stores.

International sales grew 19% to $93 million, reflecting strong growth in Europe, Australia and Japan. Brand strength continues to build across newer markets as we leverage our key channels to drive awareness and scale our international presence. In Europe, digital and marketplace demand was incredibly strong across core categories and wholesale strength was supported by ongoing door expansion and brand building momentum. Australia also saw strong digital channel growth combined with healthy sell-through trends at key wholesale partners.

While Europe and Australia are facing challenging macroeconomic environments and constrained discretionary spending, our brand credibility, premium positioning and localized engagement is driving strong performance for us.

Sales in Canada were below our expectations. While D2C sales were strong and wholesale consumer demand remained healthy, our wholesale partners maintained a cautious approach to inventory purchases, which resulted in softness in sell-in. And then Japan, brand awareness continues to build. As we lap 1 year in the market, we remain excited about the upside potential. We've expanded to just over 500 wholesale doors, recently launched our e-commerce platform and continue to see growing consumer demand for the brand.

Now moving down the P&L. Adjusted gross profit increased 12% to $288 million, and adjusted gross margin expanded 170 basis points to 59.5%. Operational improvements, including continued pricing discipline, product cost management and other factors drove 110 basis points of margin favorability. The net tariff of benefit to adjusted gross margins was 60 basis points, reflecting a 170 basis point or $8.2 million benefit from refunds of IEEPA tariffs expensed in 2026, partially offset by a 110 basis point impact from higher year-over-year realized tariff costs.

Adjusted SG&A increased 19% to $220 million and deleveraged 410 basis points to 45.4% of sales. As expected, the largest contributor to the increase was the timing of our brand campaign, which shifted into the second quarter this year from the fourth quarter last year. We also experienced an unfavorable year-over-year impact from a higher short-term incentive compensation accrual. Beyond those items, SG&A reflected continued growth in productivity investments as well as elevated distribution and fulfillment costs driven by ongoing inflationary pressures across our supply chain.

Adjusted operating income decreased 7% to $68 million or 14.1% of sales. Adjusted net income decreased 8% to $51 million or 10.5% of sales, and adjusted net income per diluted share increased 2% to $0.67.

Turning to our balance sheet. We ended the quarter with approximately $60 million in cash as compared to $270 million in the prior year quarter. Inventory increased 5% in the second quarter to $359 million. Total debt, excluding finance leases and unamortized deferred financing fees was approximately $102 million compared to $76 million at the end of the second quarter of last year. Our capital allocation priorities remain unchanged. We remain committed to reinvesting in the business to drive sustainable growth. In addition, we continue to return value to shareholders through share repurchases. To that end, in the second quarter, we repurchased 2.8 million shares for $130 million under our existing $500 million share repurchase authorization.

Now turning to an update on our fiscal 2026 outlook. We are pleased with our performance in the first half of the year and remain excited about the opportunity in front of us driven by the strength of the brand, exciting innovation across key categories and our strengthening global go-to-market strategy. We continue to expect full year sales growth of 7% to 8%. From a phasing perspective, we anticipate the total sales growth rate to be relatively consistent throughout the rest of the year.

We are also reiterating our growth expectations across channels, categories and geographies. By category, we continue to expect high single-digit to low double-digit growth in Coolers & Equipment, supported by the momentum we see across soft coolers, bags, harfd coolers, cases and storage. In Drinkware, we continue to expect mid-single-digit growth for the year, driven by increased innovation, the continued broadening of the portfolio and global expansion.

By channel, we expect wholesale to grow at a high single to low double-digit rate and direct-to-consumer to deliver mid-single-digit growth for the year. By region, in the U.S., we anticipate low to mid-single-digit growth for the full year. We continue to project international growth in the high teens to 20% for the full year.

With respect to adjusted gross margins, we are raising our expectation for the full year to reflect the gross margin performance year-to-date, including operational favorability and the impact of IEEPA tariff refunds, partially offset by continued inflationary pressures in commodity and inbound transportation costs.

We now expect gross margins of 57.5% to 58%, up 100 basis points compared to prior guidance. On a year-over-year basis, the midpoint of the revised guidance implies a 40-basis-point increase versus the 60-basis-point decline implied in the prior guidance.

Our guidance assumes tariff rates return to approximately 20% beginning in September.

On operating expenses, we continue to expect to see expense growth to moderate in the back half compared to the growth in the first half of the year. As expected, this will be driven primarily by the timing shift of our brand campaign into Q2 this year compared to Q4 last year. For the full year, we now expect OpEx growth of 6% to 8%. This is slightly higher than our prior outlook of 4% to 7% growth and reflects the increased inflationary pressures in distribution, fulfillment and other costs as well as our continued investment in growth and productivity initiatives, including international expansion.

We expect to partially offset these pressures through ongoing cost discipline and operating leverage.

We now expect 2026 adjusted operating income margin to be approximately 14.9%, up 30 basis points compared to our prior guidance of 14.6%. We expect adjusted operating income growth of 10% to 12% for the full year compared to the prior guidance of 8% to 10% growth.

From a phasing perspective, we expect operating margins in the second half to increase approximately 280 basis points year-over-year, with the Q4 increase slightly above that.

Turning to the remaining P&L items in our guidance. We continue to expect an effective tax rate of approximately 24%. We now expect diluted shares outstanding of approximately 75.4 million compared to the prior guidance of 76.6 million. This reflects the impact of $130 million in share repurchases to date in 2026. We expect adjusted earnings per diluted share of $2.94 to $3, reflecting growth of 19% to 21% compared to prior guidance of $2.83 to $2.89, a growth of 14% to 17%. This increase in EPS relative to our prior guidance reflects strong year-to-date operating performance, the benefit of IEEPA tariff refunds I discussed earlier of $0.08, partially offset by increased inflationary pressures in commodity, transportation, distribution, fulfillment and other costs.

We continue to expect capital expenditures of between $60 million and $70 million and free cash flow of between $200 million and $225 million in 2026.

As it relates to our share repurchase program, as of July 4, 2026, there is approximately $370 million remaining on our share repurchase authorization.

As we close, I want to emphasize that we are pleased with both our performance and execution in the first half of the year. We delivered broad-based growth, expanded gross margins, continued to drive strong demand across our key categories and markets, returned meaningful capital to shareholders and increased our outlook for 2026. While the operating environment remains dynamic, we believe the strength of the YETI brand, our innovation pipeline, our growing international business and the discipline of our teams position us well for the remainder of the year and beyond. We remain focused on executing against our long-term growth strategy and creating sustainable value for our customers, shareholders and stakeholders.

With that, I'll turn the call back to the operator for Q&A.

[Operator Instructions] Your first question comes from Brook Roche from Goldman Sachs.

Matt, I was hoping that you could expand on your growth outlook for the U.S. market and the slowdown that's embedded in your forecast as you go up against some meaningfully tougher compares? Is there any way you could frame the underlying demand that you've seen as you've moved through the early back-to-school season? Perhaps you provide a little bit of quarter-to-date commentary about the demand that you've seen by channel, and outline what gives you confidence in the sustainability of continued growth in that core U.S. market from here?

Brooke, this is Scott. Thanks for the question. Thanks for joining us this morning. So look, we were really pleased with the demand that we saw throughout the first half. We had steady consumer demand over the course of the first 2 quarters. In fact, in the United States, our consumer demand exceeded our reported sales. So all the trends are positive. And we don't really see anything derailing those trends. We had improved corporate sales in the quarter, improved international sales. The innovation is working, as you heard in Matt's prepared comments. We're really happy with the products that our commercial and product teams are bringing to market. So we see -- we have a lot of confidence in the trends that we're seeing in the business.

We are mindful, however, that more than half the volume remains. There is some consumer uncertainty in the market. So we're confident in the trends, but being cautious in the outlook for the back half of the year.

Yes. Booke, I would just add, I hope what you take away from the call and following the story for a long time is, we are very focused on driving innovation, driving our channels, supporting our channel partners, building this brand. And we're not quarter-to-quarter. We're thinking about the long-term opportunity, and that's how we're building the business. And so we feel really good about the first half of this year. We like the direction we're going in the back half of this year, but we're thinking about '27, '28, '29 million.

Great. That's very helpful. And Matt, as you think about that '27 to '29 forecast, I know we'll get a lot more about this in the Investor Day in a few weeks, but do you still believe that the double-digit growth outlook is still on the table in the near to medium term?

Yes. I mean thanks for calling that out. I mean we will -- we're excited about the Investor Day, as I said in my prepared remarks, there's a lot of good stuff. It would be a great chance to see incredible both the talent we have on the team and how they're driving this business and why we've been able to perform and be resilient in those times as we've gone through the past couple of cycles. As we look out into the future, I think one of the things you heard on the call was we talked a little bit more about what was the dynamic we're seeing in the Drinkware category.

And when you sort of peel back the underlying drivers of the business, we believe this is not only a top line growth engine, but that the outsized EPS we can drive through both the operational driving the free cash flow and we can go more opportunities out there in front of us than behind us. And so as we go into our 21st year as a company, we're incredibly excited and bullish on where we're heading.

Your next question comes from Randy Konik from Jefferies.

I guess, Matt, I wanted to just unpack how you thought about your commentary around drink, where you talked about some headwinds abating, I think, by the end of the year. Maybe just kind of give us a little bit more detail on what you're seeing, how you're thinking about the product breadth and the geographic expansion of the product category ahead to kind of -- it almost sounds like you think that you'll have a new base, you'll be able to reaccelerate the Drinkware business into next year and beyond because of distribution and new products. Is that kind of accurate? Can you kind of talk to that?

Randy, thanks for that. I would say a couple of things. One, we have consistently said this over the quarters and frankly, over the last few years on this Drinkware topic. What we called out today is really the articulation of the power of the strategy, the relevance of our assortment, the type of team we have to continue to drive the diversification of our Drinkware. So as the world has been very focused on a narrow portion of the Drinkware category in the last few years, we've built out our product portfolio, and that's really what's driving the underlying strength in Drinkware. What we wanted to call out today is there's an acute drag and a headwind to that. we have more than overcome that and then driven growth on top of it. And then we called out that by the end of this year, we'll have largely cycled through those specific narrow set of SKUs, which should rebaseline the business and give us an opportunity to really showcase the innovation, the strength and the relevance of the brand that we've built into that broadening Drinkware category.

So what we want to do is we wanted to show what we've been saying because this is what the team has been executing over the last number of quarters, and we're really pleased with where it's setting us up domestically, but more importantly, I think the opportunity globally continues to become more in focus, more realizable and more relevant. So we're passionate about where we're going.

Super helpful. And then I guess what I want to try to get kind of dimensionalize is, where the business has come from over the last couple of years to where it is today in terms of it's almost like you've added the capability to drive more speed through the organization, get products, more products produced, more products produced faster. Can you maybe give us some help on where you've come from? What have been the more of the quantified changes in speed and ability to produce more things and distribute more that would be super helpful coming into the Analyst Day because I'm sure you're going to talk about all the products you're going to be kind of launching over the next couple of years. So really there.

And then lastly, around that, I think Scott said in his answer to one question that demand exceeded this reported sales growth figures, which means there's probably some sell-outs of things, et cetera. So talk about what you're doing to kind of continue to enhance supply chain to be able to meet increasing demand for products where you're seeing some sell-outs, that would be super helpful?

Yes. Thanks, Randy. I'll take off a few of those things. What Scott said was that consumer demand exceeded our reported in the U.S., which is a dynamic really, we really like. I think the other thing that we have is as we have continued to cycle through the buildup of our global supply chain and diversifation of our supply chain is it's created more nimbleness. And you heard us call out on the call the investment we continue to make in our supply chain to drive supply chain flexibility, to increase capacity where needed, to shorten lead times and I'll get to the innovation piece of it. But it is important to note that Scott also called out some significant inflationary headwinds that we've seen that our supply chain team is doing an incredible job trying to combat, but that have come up in 2026.

I think on the innovation side, both the innovation and the commercialization, as I called out, will be big topics as we get together here in about 30 days or so. And so we'll go into more depth on what we're doing there. The significant improvements we've made in innovation cycle time, but also the strategy and maturation of our commercialization go-to-market. You heard me say on the call, building up product and creating more product is one thing, getting it to the right place at the right time to intercept the right consumer is the next phase of it. And we're excited to talk to you all about what we're doing in that regard.

Randy, I'd just add, you had a part of that question was around inventory. We feel really good about the inventory that we have at the moment. It's the healthiest position we've had in quite some time. So we feel like the team has done great work getting in stock and preparing ourselves to deliver the demand in the back half.

Your next question comes from Peter Benedict from Baird.

First, just around the 20% tariff assumption, I guess, starting in September, I think we can all agree anything is possible these days. I'm just curious if there's any -- you have any line of sight into that? Is there something that you're seeing that suggests that's highly probable or are you just trying to plan conservatively given the environment?

Yes. Lee, the tariff discussion is one that changes regularly. No, we don't have any particular insight into this other than the fact there are still remaining investigations that are underway and with the intent to potentially introduce more tariffs. We have no particular insight on whether that will or won't happen, but we're just being conservative in our outlook.

Okay. That makes sense, Scott. And then maybe can you build a little bit more on the inflationary pressures that you've been seeing, you called out raw material costs. There were some supply chain stuff. Can you maybe frame kind of the largest buckets there, what you're doing? I mean how impactful they are right now and what you're doing to try to offset them going forward?

Yes, sure. We'll do. Yes. This is something we started talking about this a little bit last quarter. And candidly, the pressures have gotten worse over the course of Q2. They fall in a couple of categories that hit the P&L in different places. We have a variety of different pressures that are weighing on input costs into our cost of goods, inflationary pressures and things like stainless steel, magnets, oil derivative products like resins that go directly into the production of our products. Those are direct. FX weighs on our cost of goods as well. And then in OpEx, it's really about fuel and transportation and the price of oil and the additional costs as it relates to transportation has been weighing pretty heavily on the business.

And so we continue to watch this. Obviously, it changes with regularity. And look, we are on this moving average inventory. And so when we have pressure or a benefit, it takes a while for it to be felt in the P&L. And so we'll see how this unfolds over the course of the second half, but it's something that our teams are actively working to drive mitigating responses. And I think you saw that in our gross margin performance. We had a 170-basis-point increase in gross margin year-over-year, largely based on the hard work of our commercial teams, our product teams, our supply chain teams, driving product and channel profitability. Yes, we did have a $8 million benefit from tariffs -- but much of that was eaten up by the additional inflationary pressure.

So really proud of the work that the team did to deliver these gross margin results even with the pressure weighing on the business.

Peter, and the one thing I would add to what Scott said is, and I mentioned this in my prepared remarks, we have active productivity programs going on inside the company to drive making sure that we've got the right cost structure, but that we're also helping mitigate some of these pressures that continue to seem to come.

Your next question comes from Phillip Blee from William Blair.

This is Olivia White on for Phillip Blee. So international has been a bit choppy. This quarter, you were up against easier comparisons. How are you thinking about a more stable growth rate going forward? What does inventory levels look like for sell-through demand in key markets. And as Asia continues to ramp, can you provide some color on the early contribution from Japan and how you expect additional market launches across the region to contribute to growth over the next several years?

Yes. So look, we talked about in the end of Q1, you do have timing elements that weigh on the quarter-to-quarter volatility in the business. But we continue to see strong performance and strong demand signals across the globe. We've got -- each market has a slightly different story. We have ANZ and Canada, they are a little bit more mature markets that are performing incredibly well. Australia and New Zealand had a really strong Q2. So we're pleased to see the performance there. Europe is really driving significant growth for us and we're just starting to get scale and have real traction with the customer base and the awareness is increasing across Europe. And I think that's going to deliver growth for many years to come.

And Asia is really interesting. It's one that we have significant growth aspirations over the long haul. We're very newly entered into the markets there. We've seen some terrific traction in Japan. Our e-commerce site is performing extremely well. We know that growth will take -- it will be a multiyear build. It's not something where we expect it to explode in the short term, but we are really happy with the results we're seeing there. And more importantly, happy with the results we're seeing and the reaction we're seeing from the Japanese customer. We've had some terrific activations in the market that garnered a terrific response from the customers there. And so we're really thrilled about where that's heading.

And look, we still think that we have -- we're on track to deliver our growth expectations for the year for the international business as a portfolio.

Okay. Great. And then does the additional cash benefit from tariff refunds increased your appetite for opportunistic M&A? Or does your priorities remain largely unchanged relative to where they refunds? And more broadly, how are you thinking about balancing M&A, share repurchases, debt reduction and other capital deployment opportunities going forward?

Yes. Thanks for the question. I'll take the front on the M&A side, and then Scott can talk about the capital allocation. Nothing changes. It doesn't change the way we view inorganic innovation, acquisition of materials, designs, talent, capabilities that we think help drive the long-term growth algorithm for YETI.

Yes. And as an artifact of that, we have no intention of changing our capital allocation priorities. Obviously, if we have the cash that will go back through our normal prioritization process of looking for growth, looking for selective M&A opportunities and then returning capital to shareholders if the cash flow is available.

Your next question comes from Peter Keith from Piper Sandler.

Matt, on the 4 letters brand campaign during Q2, we thought that was excellent. We've got good feedback on it as well. It doesn't -- I guess the guidance implies you're not going to be doing national branding in the back half. So could you talk about maybe the -- are there longer tail benefits from 4 letters that are showing up, maybe in some metrics like e-com traffic, YETI Search? Trying to understand the longer-term benefits of what we thought was a great campaign.

Peter, thanks for that, and we would echo it. Not only did we think it was a great campaign and represented YETI, but the metrics we saw in Q2 from a reach, the audiences that it touch, the age of the audiences, the moments it intersected, but also the fact that it was scale from linear down to digital. And we looked at it and I said the word campaign and probably should have used the word platform. We look at this as a platform that we can use and continue to bring back to life because we think it has more than just a campaign moment.

And you're seeing that already and that we've taken this big Q2 campaign and our incredible internal creative team has broken it down into smaller digital-focused bites where we can target different audiences, different communities, different YETI passion points. And I think you're going to continue to see us do that through the rest of this year. And frankly, I think it will last beyond 2026.

As far as a broad-based kind of big bang campaign. We don't have one planned for Q4 over the back half of this year right now. That was the shift from Q4 to Q2. But we do look at those things opportunistically. If the opportunity presents itself and it makes sense, we think -- based on the metrics we see, we think that they're really impactful for YETI driving that top of funnel awareness, brand awareness, reach new audience, diversification of the audience. So I appreciate your positive sentiment on it. We're excited about where this platform can go.

Okay. And I want to focus a bit on Drinkware. You mentioned a 600-basis-point headwind in the U.S. from 3 SKUs. Could you talk maybe just unpack that a little bit. What's happening? What are the 3 SKUs? And then I believe you're reiterating your Drinkware growth for mid-single digit despite this headwind. So maybe you can help us connect the dots on that.

Yes. So really, when we've been talking over the last going on 3 years and the big kind of hype cycle, trend-driven cycle that happened in the Drinkware category. As we've been saying for many quarters, it was highly concentrated both in audience and in SKUs that it was focused on. YETI had some SKUs that enjoyed some of that growth. What we were saying is that is cycled, and we've been saying that part of the category has been cycling out. What we wanted to give investors was a view into how hard that cycle -- which would be consistent with everything we've been saying, how hard that cycled out and what the drag on YETI is really is a way of showcasing and putting into context YETI's mid-single-digit Drinkware growth is against that headwind. And I think that shows the power of the strategy that shows the power of the portfolio diversification. It shows the relevance of the rest of our Drinkware portfolio and that there continues to be a really interesting opportunity for us in that important category.

Okay. So that -- you had seen that in the full year guide all along, you're just highlighting it for us now?

Correct.

That's right.

Correct.

Your next question comes from Joe Altobello from Raymond James.

I want to go back to gross margin, obviously, significant upside versus what we were expecting. I think what you were expecting as well, even excluding the refunds, but you called out pricing discipline as a driver there. Can you elaborate on what exactly that means?

Yes. Look, we have product and commercial leaders that are constantly evaluating product and channel profitability, and they look at pricing as is a key component of that. And in the quarter, we saw some meaningful benefit from that. Obviously, we have a lot of layers that this factor in the gross margin including that, including operational optimization in the supply chain optimization, working with our suppliers to drive productivity, FX was a benefit in the quarter. And so there are a number of factors that really helped us deliver strong gross margin results, including that, but that's just part of the the normal cadence of managing the business. And our commercial and product teams are highly focused on driving product and channel profitability.

Okay. So it's not necessarily list price increases. It's pricing and promotion, all of that kind of combined [indiscernible]?

That's right.

Okay. And on international, you reiterated your guide for this year up high teens to 20%. I think you're up 14% year-to-date with the Japan rollout. Maybe you can kind of give us what do you see as -- where are you getting the confidence to get that acceleration in the second half?

Yes. We have the benefit of seeing the demand signals. Look, there's always going to be quarter-to-quarter noise, and we talked a little bit about that in Q1, some items that could have hit in the quarter that didn't. And so we see the trajectory of the business and see the healthy traction that we're getting in the market. Obviously, each story is a little bit different. We've got areas where it's all about building awareness. We've got other areas that are mature and continue to drive the business in positive ways. But we feel good about the trajectory and the capabilities that we've built in our international businesses and are seeing -- really seeing the fruits of multiple years of investment there to put the right teams on the ground, have the right supply chain capabilities to be able to service the market. And we're starting to see that momentum build.

Your next question comes from Peter Grom from UBS.

Great. So a quick follow-up just on Drinkware. Maybe just the 2% growth in the quarter, it's a little bit below your full year guidance range. It was a bit below consensus as well. So just kind of curious how the performance came in relative to your own internal expectations this quarter? And then just on the guidance, mid-single-digit growth for the year would imply some acceleration from here. So just kind of curious what drove that improvement in the back half?

Yes. Look, I think this is just quarter-to-quarter noise more than anything else. We -- again, we keep seeing the demand signals for Drinkware. There's lots of factors, timing of launches, timing of wholesaler purchasing pattern. So we didn't see anything in Q2 that highlights or indicates additional pressure weighing on the category. In fact, some of the issues that Matt described with this one narrow set of of SKUs weighing in the quarter, that obviously certainly had an impact. But we knew that on the front end. And so there's nothing to happen in Q2 that makes us feel any different about the full year outlook.

No. And I would just add, what you're going to continue to see from us, which is consistent is a cadence of innovation, new products, new SKUs, new colors, cycling things in and out. And so I think the quarter-to-quarter movement, as Scott said, can be highly influenced based on the timing of those things. But we're really pleased with the broad-based demand and the broad-based opportunity that we see in Drinkware.

Great. And then Scott, just a follow-up. The increase in the OpEx guidance, is that simply just related to the higher transportation costs? Or are you also increasing brand investment as well?

It's largely higher operational costs related to inflation, but there is some additional -- we continue to invest in both productivity and growth driving initiatives. There's a little bit of both in the lift.

Your next question comes from Noah Zatzkin from KeyBanc Capital Markets.

I guess, first, is there any way to quantify the incentive comp impact related to tariff refunds in the quarter? Just trying to determine how much of that might be more onetime in nature?

No. So I'm not going to really break out. That is not -- when we referenced the incentive comp, that was simply a function of the year-over-year accrual relative to last year, had nothing to do with tariffs. So that reference in the prepared comments wasn't related to tariffs. There's not a consequential impact on full year incentive comp based on the refund.

Very helpful. And I guess, second, just on corporate sales, can you remind us how large that business is? And maybe provide some color on the trajectory there? And then any way to think about the headwind that's been there in prior quarters and the opportunity for that to reverse?

Yes. So corporate sales, obviously, we had a tough Q1 and then had some really nice recovery in Q2. And I feel like the team has got a really good strategy there to continue to drive that business. It's roughly 25% or 1/4 of the D2C business. And look, we are continuing to emphasize that, and the team is leaning in. It's got a good plan in place. And as we described at the end of Q1, we weren't projecting a significant tailwind out of corporate sales, but the absence of a headwind, and essentially, that's exactly what happened. And so we feel good about the trajectory, and we've seen continued demand or improved demand there, and I think that will cease to be a discussion over the course of the next couple of quarters.

Your next question comes from Anna Glaessgen from B. Riley Securities.

Just one for me. We've seen sell-through exceeded sell-in for quite a while now tracked channel inventories were down. I guess, does the guidance as to more balanced sell-through and sell-in at any point in the year? And if not, when do you think we could see this reach parity?

Yes. Look, we -- the guidance does imply a balance between sell-in or sell-through. Look, it's always hard to predict exactly how that will play out over the course of the second half, but we aren't expecting a big inventory build or continued decoupling of those. So when we think about -- and that's the goal of the team to try to create an inventory levels that match the sell-through. So that's how we thought about the guide.

And there are no further questions at this time. I will turn the call back over to Matt for closing remarks.

Thank you, and thanks, everyone, for joining us today. I look forward to talking to you on our Q3 call and meeting some of you at our Investor Day.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

I'm Peter Benedict, senior retail consumer products and services analyst. Really pleased to welcome the team from YETI back to the conference. YETI is a premium brand effectively. It's known, I think, most for creating products that bring distinctive design, improved performance and really unmatched durability across several categories, drinkware, coolers and equipment bags and others. Their sales are expected to hit around $2 billion this year. They have a robust balance sheet with net cash, significant free cash flow generation.

The stock carries a market cap of just under $4 billion. Here to talk with us today, CEO, Matt Reintjes; and then recently appointed CFO, Scott Bomar; and we have the Head of IR, Arvind Bhatia, who's out in the room. There will be a breakout session afterwards. So if you want to continue the conversation, the Astra One room.

We're going to kick straight into Q&A here. So guys, again, good morning. Thanks for making the trip. I want to start with maybe a look back here over the last few years, Matt. A lot has gone on. There's been some organizational redesign. There's obviously been supply chain changes. Maybe just talk a little bit about how you've positioned the company now for growth going forward from a leadership standpoint. We think about categories and we think about regions, and then maybe we'll get into specific roles like the CFO.

Yes. Perfect. Thanks, Peter. Thanks for having us, and thanks everyone for coming in this morning. The -- your intro is great. I think you kind of covered it for us. I was hoping we could sort of spike the ball with the intro. But the -- I'd say a couple of things. It has been a busy few years. I just wrapped my 10th year at YETI in September and to think about where we've come from a U.S. really Texas-based business to building a global brand. It's been pretty exciting.

And I think over the last 3 years, the biggest change that we've evolved is how we think about our product organization, how we think about our go-to-market, our regions. And so really, what we've done is we've broken our product groups up into 3 discrete groups. And with the idea and intent that with focus drives impact and it also drives speed to value. And so our 3 product groups, we have a drinkware group that wakes up every day and cares about drinkware. We've got a gear and equipment group that focuses on things like hard coolers, protective storage cases and boxes, which we've mentioned on the last couple of calls, we're excited about what we're seeing there.

And then a soft cooler and bags group, which you've seen over the last few quarters, the impact and results of what we're doing in soft coolers and bags with incredibly talented teams below each one of those. Our soft coolers and bags business is run by a gentleman named Layne Rigney. Layne was the long-time CEO of Osprey. And prior to that, Layne and I had an overlap at CamelBak. Our gear and equipment business, as we think about -- I'm talking about our Drinkware business for a second. Our Drinkware business is run by Hannah Mara. She's been with us for a number of years and has really been leading the vision around the expansion, redefinition and growth of Drinkware.

And if you look at what we've talked about through 2024 and 2025 was the strategy we are driving in Drinkware was relevant diversification. So you think about the things that we've been powering that business, stackables, sports hydration, this early entrance into premium cookware, even with our most recent carbon steel has really been led by Hannah and team. And underneath gear and equipment, which goes to our legacy of hard coolers, Bill Harmon, who joined us from a company called Goal Zero, but a long-time view into expansion of consumer products, outdoor, durable performance, all the things that fit our brand has been great.

And then you combine that with -- we've established 3 very clear regions, an Americas region, an EMEA region, an APAC region with a leader over each, deeply experienced leaders over each of those 3 groups who are -- come from different backgrounds of scale and buildup. So in the Asia Pac region, it's much more of a build and opportunity. In Europe, it's an amplify. And in the U.S., it's continuing to drive depth, growth, scale and opportunity. So we're incredibly excited about the structure we have to go support the strategy of where we're going with this brand.

That's great. And Scott, you joined earlier this year. So maybe give us a sense of where you came from? Why did you come to YETI? What you see as the opportunity?

Yes. I spent the last 20 years working at Home Depot in a variety of different roles, sort of half my time there was operational, half of my time in a variety of different finance functions. When I looked at this opportunity, what I saw with YETI was, of course, first put your finance hat on, it's a strong, clean balance sheet, have the financial resources to invest to do the things that are required to continue to grow the business. But mostly, I just saw several very clear actionable, tangible growth vectors and opportunities that are right there for this brand with broad shoulders to go tackle and the resources and capabilities to tackle them.

And so looking at those 2 things together, just felt like a terrific opportunity. And in my 90-odd days there, just has done nothing thing but reaffirm that belief that I had from the initial onset. And you just see every day, we get a new opportunity comes across the desk about here's a particular application of the YETI brand in a different market or through a different product lens that's right there for us to go get. And it's just really exciting. I think there's just a terrific runway for this business for many years to come.

Yes. And it's interesting. I think as we look back over the last several years, I feel like some of those growth vectors have maybe been held back a little bit because of all what's been going on from a tariff perspective. I mean you had even COVID and supply chain, all the disruptions. Maybe talk, Matt, a little bit about how you've now positioned the supply chain and the sourcing mix, which is now kind of going to allow you to go after those growth vectors and not just be focused on where are you making it, where you're getting it from, what's the cost, that kind of thing?

Yes. I think it's -- so we started our supply chain transformation over the last few years. And I would say that's largely complete from a diversification and optionality. And importantly, the supply chain we shifted through some of the tariff time really was focused around we want to be in the best place to make our product with the highest quality, driving cost, driving availability and really driving speed to innovation. And so I would say the significant heavy lifting part of that work is complete.

We have a much more diverse supply chain today than we did 3 years ago and definitely 10 years ago. And so now it's about applying pressure and speed to chase that opportunity. But if I step a little bit further back, obviously, we went through COVID, we had strong growth. The brand was really scaling the way we wanted going into COVID. We went through COVID and really accelerated that. So the growth performance was strong. The thing that during that COVID period that was most impacted was the innovation engine. It was the thing that was most disrupted. And so we were able to drive the business performance but the innovation pipeline and the execution was more challenged. We couldn't access our factories. Our teams couldn't travel to it.

And so really, that opened up for us in 2022. Well, if you look at what started to happen in 2024 and 2025 and the acceleration and the expansion and diversification of our Drinkware, the expansion of our soft coolers into our Daytrip, the expansion of our Camino totes, driving further bags portfolio expansion, driving further hard cooler. All those things happened coming out of our ability to get back, build on our supply chain, work with our partners. And so that pace really over the last 24 to 36 months has been a result really of being able to put our team back on the task and the opportunity we see in front of us. And at the same time, we're expanding our global audience. We're expanding our global footprint, and that's why I talk about that 3x3 structure at the beginning.

Yes. So growth, obviously, the theme here. Your recent results, I think, started to kind of get the attention of the market. You had a nice beat in the first quarter. I think sales were up 8% year-over-year. You had strength in wholesale, which was up close to 20%. Coolers and equipment, 11%, even drinkware was up 5%. And your profits beat by, I think, more than 40%. So maybe just talk about the performance in 1Q, the demand signals that you're seeing. I think you were seeing them last year, but they didn't really show up and so it was little frustrating, right? The stock didn't behave. But just talk about what you're seeing there on that front.

Yes, maybe I'll take that one, Matt. So look, I think you're right. We had been seeing strong demand signals for a number of quarters. It wasn't a brand new thing. But Q1 was an acceleration from Q4, which was an acceleration from the balance of 2025. Again, there's always going to be lumpiness. We have a reasonably sized wholesale business. So sometimes you get orders around the edge of a quarter and they fall in one quarter versus another. So you get a little bit up and down there. 2025 was characterized by increasing demand signals. However, we had this imbalance between sell-in and sell-through where some of our wholesale partners were drawing down on inventory.

And so we were seeing the customers' affinity for the products and the satisfaction they have with what we're putting in front of them. We just weren't seeing it in the financial results because the sell-in was trailing what we were seeing from a true demand signal perspective. But we saw a breadth of performance in Q1, and we're really excited about that. There's a couple of little fits and starts there where we had a little softness in corporate sales. We had some timing items that affected the international business. But even through all of that, when we looked where we see the customers' demand signals, they're really voting with their wallet. They're happy with the products we're putting out there, and we're seeing strength across our consumer base. And so -- which is why we were able to deliver the quarter and also reaffirm and slightly increase the guidance for the balance of the year.

The growth pillars going forward, I mean I think one of the things that we're excited about is you're going to be hosting an Investor Day in September down in Austin. I think a lot of investors are kind of waiting for that, looking to that as a way to kind of get some confidence in the growth algo. We see innovation, we see distribution opportunities. We see international. There's a lot of ways to go here. But I want to start kind of with the brand because at the end of the day, the brand is what's so critical here.

And I think through all of the ups and downs, I guess, over the last few years, it feels like the brand has been as relevant, if not stronger than ever. So maybe talk about what you think the brand stands for? What -- how do you measure the health of the brand? And what's kind of the permission structure you think the market is giving you in terms of where you can go with the innovation.

Yes. I mean there's a lot in there. You may have to prompt me if I miss anything. I'll start with product, which is not what you said, but our product is all rooted in durability, performance and design. And I think product and brand for us are so inextricably kind of interrelated or interwound. Without great product, a brand can only work so hard, and it can only sustain for so long. And I think that's one of the things that YETI has done for 20 years now is drive great products, great desirability for product and then amplify a brand on top of it.

When I think about our brand and our definition of our brand, we have this idea that it's built for the wild and the definition of the wild in 20 years ago was hunting and fishing in the Texas Gulf Coast. We were just talking before we came up here, the Division I Women's Lacrosse Championship was pretty wild. And there were some athletes on that field that we've equipped with product that outfit the work they do, the grind, the kind of hard work that happens off the field. And so our definition of wild and what it could be has really evolved. While we still show up at fishing events, we're also at climbing events and we're at surfing events and skate events and equestrian events and Western lifestyle, but what's made this brand special is I think we have an incredible discernment of who our audiences are, what's important to them, how our product can support what they're doing, and we show up for them.

We don't buy our way into places. We don't hang banners. It's really a connected authenticity to use a word that probably gets overused too much, but it's really about a realness. And Peter and I were talking a little bit earlier of a story, I mean you take something, Formula 1 is commercial as commercial gets. And Oracle Red Bull racing is one of the flagship, if not the flagship brands within Formula 1. We have a partnership with the Oracle Red Bull racing team, but it started from a basis of they had a need. They had a need at Milton Keynes and they were trying to focus on their sustainability and eliminate single-use and we make incredible cups. So there was a nice synergy there.

Well, then that parlayed into a need within the garage with the Boltis. The Boltis need to keep the engines from overheating. The way they do that is with dry ice. They didn't have a great storage solution for dry ice to put into these blowers to blow through the engines. So they had a very practical need. YETI cooler, they fill with dry ice. We worked with our engineers, made a special scoop for them. Then we became part of the kit. We became part of the team. So it was much more than a sponsorship deal trying to draft off somebody else's brand or somebody trying to associate with our brand. It's really a purpose-driven thing.

And I'd say all the time, we make our marketing dollars work really hard because we do it in an incredibly nuanced way. It's why you've heard us talk about in the past about communities and pursuits in these audiences. And so we can show up at a surf event and we're welcomed in or a skateboarding event or a climbing event or a backcountry skiing event or a cooking live fire. And I think that's really the stacking of what the brand has been built on, but it's not about evolution because evolution means you're sort of leaving behind where you are. For us, it's really about stacking these bricks on top of each other.

And I want us to be as relevant to the audiences that we spoke to 20 years ago as we were then back in the day, and then the newer audiences, and that's why we've talked a lot about sport. I think what's happening in sport right now is one of the most dynamic things about the money going into sport, the focus on sport, at all levels from youth up to professional. And we're making sure that we're not only invited in that our products are relevant and being used there, but that we can be deeply ingrained. And that's a global thing. So it's not -- we're not chasing big headline sponsorships where we want to show up on the ball field on the weekend. We want to show up on the sidelines. We want to be in the collegiate locker rooms. We want to be on the sidelines of I think 2 recent ones, the NWSL, if you watch an NWSL match, we're on the sidelines and partner with the NWSL. LOVB Volleyball. If you watch any LOVB, we've been involved in LOVB early on because we see those things that not only have relevance, but they also have a real influence that water falls down.

Yes. I mean it's really unique. There are only probably a handful of brands that can really resonate with audiences across all those pursuits and feel kind of authentic. It's interesting even within some of the newer categories. I remember a year ago, we were down in Austin speaking with you guys and Layne, who runs the Bags business, was talking about one of the things he found so interesting about YETI was, I guess, within the bags world, there are specific kind of brands that fit, the bikers like a certain brand and the hikers like a certain brand. And it's hard to kind of play across, but he's like, they all like YETI. And so he sees a huge opportunity in the bags business.

That's leading me to my next question, which is we know there's more innovation coming in hard coolers, and we know there's more innovation coming in Drinkware. But what about these non-legacy categories. Talk a little bit more about bags and where you see the portfolio going?

Yes. I'll bridge to -- I think 2 things, we continue to see growth opportunity in what people would define as our legacy. And if you really looked into take Drinkware. What drinkware was in 2014 was 2 cups. Drinkware today covers the range of tumblers to something like I'm holding a stackable cup to food transportation all the way up to this kind of newer edge of us in cast iron and carbon steel skillets. So we see that opportunity.

The other one is the U.S. for us, while we talk a lot about the international global growth opportunity, the penetration -- the continued penetration opportunity in the U.S. of use cases, consumers, places we can sell we think it's really attractive, and you saw that on display in Q1. As you move into these newer categories, underdeveloped bags and I would include soft coolers in that, we think it is significantly underpenetrated for what it can be. And if you heard us call out our Daytrip, which is our day thermal bags have had an incredible run over 2025 and 2026. And I think it's the mix of use case price point, audience expansion that fits within that. The Camino tote has had a really a really nice pickup. It's been one of our -- frankly, it's been one of our best products for a really long time, and it gets found by audiences that find additional use cases for it.

But when you think about the breadth of opportunity within bags and soft coolers, you can move up and down the price stack, you can move up and down the use case. And so earlier this year, we launched our Skala hiking backpack. It's a multi-day hiking pack. To what Peter said, it's a space where you need to break into the club, the product needs to back up. It's not just -- you don't buy your way and the brand doesn't push its way in. That's a little bit of Layne's point. And I think what we saw with the Skala reception from that audience was a validator that then sets a halo for things that we can do in broader applications.

So we think about bags in terms of 3 big groups, think about every day, things you commute with, the things you move around with. If you go through the airport, 100% of people have a bag of some sort, either a piece of luggage, backpack, duffle bag, multiples in many cases. So that environment is a really large TAM where we think there's an opportunity to continue to differentiate, but also own. So every day, then you go to travel, trave the piece I just talked about. And then the third one is adventure pursuit-specific type packs like these day packs. And so we're attacking the market opportunity across all 3 of those, not just domestically, but the global opportunity that we see. And so I think there's a good long runway. And as you said, I think what we've seen are the proof points of willingness, acceptance, realization of YETI taking its durability, performance and design and transitioning into that.

I think you've also seen some good acceptance internationally. It's about 20% of your sales right now, expected to grow 18% to 20% this year. I know the majority of that is Canada, Australia, but you're into the U.K., you're into Germany, Japan, some other things on the horizon. Maybe talk a minute about the international opportunity, how you go into these markets, product, channel, distributors. What's the playbook here internationally.

Yes. I mean we've said before, the playbook -- we've seen the playbook travel. And that doesn't mean a carbon copy of exactly what we did in the U.S. But the elements that we've seen, I'll start structurally and then I'll maybe move through to brand. Structurally, we've seen receptivity to e-commerce in the markets where it makes sense and it's relevant, marketplaces building out referential wholesale to the places where people go to find new things and find cool and then building into a broader-based wholesale.

And we've seen that -- we saw that in Australia. We saw it in Canada. We have seen it and are continuing to see that opportunity in the U.K. as we started in surf shops and boat yards and now we're moving into broader sporting goods and then moving further into the urban cities. So from a go-to-market, the mix may look a little different. The way the markets develop may look a little different, but the relevance of how you intersect the consumer has stayed sound. The product portfolio, as we've transitioned the product portfolio to global, we're leveraging our same product portfolio that we've developed, but it's the assortment within that, that's changed.

Simple things, size, space and some markets are more important. So that leans towards and some just stylistic, 30-plus-ounce drinkware, less a globally relevant product, something like I'm holding, which is 8-ounce and fits under an espresso machine, more relevant in some markets. And so finding that nuance, color is another thing. Different markets have different color needs and desires. So we look at that. But I would say from a brand perspective, the brand playbook absolutely is working.

We didn't take and export the brand as it was 10, 15 years ago at YETI, we exported the brand with the playbook we have where we could be relevant to what was mature and relevant in that market. So places like Central Europe, hiking, backcountry skiing, adventure sports, those things we push a little bit harder to. In the U.K., it could be equestrian, rural lifestyle, cooking, live fire. And so those sport, those have all been things that we have a broad enough playbook that fits underneath this brand that we can actually draw the right analogy. In Japan, food, beer, surf, hike, snow sports, all those play in Japan.

Yes. So I think one of the unlocks of the stock late last year starting to show this return to growth, but also you kind of teased out the Phase 1 of the long-term algo, which was a high single-digit to low double-digit revenue growth, which at the time, the stock was in the mid-30s, and I think it was reflecting low single digit at best. And so we're seeing another move in the stock right now.

I think the September Investor Day has made a lot of interest in terms of, okay, what is that -- how do you get there? But more so also, what does that mean for margins? Is there a big investment cycle that has to maybe be laid out here in order to achieve that? Or are there productivity levers here that will allow you to kind of fund that growth. So maybe just -- you're not going to give us -- give it all away, but maybe some breadcrumbs here is how you're thinking about margins and profitability as part of this longer-term view.

We definitely want some people to come eat some barbeque in September. I shouldn't give it all away, right?

Yes, we definitely won't give it all away. But yes, look forward to seeing you all in September. Look, as we build the building blocks, I think one of the important parts of this business model is it is a diversified model, diversified product set, diversified go-to-market channels and geographies, which provides this foundation of multiple building blocks to help get us all the way to that high single, low double-digit algorithm.

As we think about margins, look, Matt and I talk about this virtually every day. Yes, expansion globally requires investment. There's things we'd like to do from a marketing perspective. But we have to look for ways to continue to drive efficiency and productivity in the business to fund that. We think there's opportunities to do that. And so we think we can have a balanced perspective. We don't expect some big investment cycle that's going to peel our profit profile in an adverse way. We intend to continue to find those areas of productivity to fuel the investment. And we do think there's opportunity for upside margin expansion, and we'll lay that out more clearly in September.

That's great. Lastly, just around kind of maybe capital allocation, $130 million in net cash, $200 million plus of free cash flow. Let's talk about stock buybacks. You increased the authorization. How should we think about that. You've done ASRs in the past. I don't know if the plan is to be more just consistent with that or those. And then M&A, I know we have 3 minutes left, but let's hit on the front.

Yes. Capital allocation, look, our principles are the same, right? We're going to continue to look for areas to drive the business forward. We like execution of returning capital to shareholders through the form of share repurchases simply because we think it's a great return for our shareholders. And we see the prospects in this business and think that's a great way to return capital to those that invest in us. And Matt, do you want to handle the M&A question?

Yes, I would just say, I mean, obviously, start with buybacks because the ratio of what we've done in buybacks to anything related to inorganic innovation is obviously, buybacks are the priority. I think when you think about the idea of us doing something inorganically, I think we've got enough proof points out there of now you sort of get what we're trying to do. When we see something where there's something that's undersized, an underknown brand, has a technology capability, in some cases, talent that we can bring in to accelerate something that's on our road map.

Most things are doable with time and doable with resource, and we have an incredibly talented and capable engineering innovation and product development team. But for us to go jump on something faster. So if you look at the shaker bottle, we closed that deal. We had a YETI version with a new material package, which allowed for it to be dishwasher safe. We had a new lid design back in the market late in 2025. We took some DNA from the backpack acquisition. That DNA is being pulled through wholly new YETI products and accelerating that. So we look at it more as a jump-start and accelerant versus a consistent ongoing strategy. I would say it's an opportunistic, but we see everything that's out there in the market. So we're really discerning about what we think is additive to what we're trying to do, right, which is build this brand.

Yes. All right. Great. Well, we're up on time. But again, Astra room for the breakout, but join me in thanking the team from YETI.

Good morning, ladies and gentlemen, and welcome to the YETI Holdings First Quarter 2026 Earnings Conference Call.

[Operator Instructions]

This call is being recorded on Thursday, May 14, 2026. I would now like to turn the conference over to Arvind Bhatia, Head of Investor Relations at YETI. Please go ahead.

Good morning, and thank you for joining us to discuss YETI Holdings' first quarter fiscal 2026 results. Leading the call today will be Matt Reintjes, President and CEO; and Scott Bomar, CFO. Following our prepared remarks, we will open the call for your questions.

Before we begin, we would like to remind you that some of the statements that we make today on this call may be considered forward-looking, and such forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. For more information, please refer to the risk factors detailed in our most recently filed Form 10-K. We undertake no obligation to revise or update any forward-looking statements made today as a result of new information, future events or otherwise, except as required by law.

During our call today, we will be discussing certain non-GAAP measures. We use non-GAAP measures in certain context as we believe they more accurately represent the true operational performance and underlying results of our business. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release or in the presentation posted this morning to the Investor Relations section of our website at yeti.com. I would now like to turn the call over to Matt.

Thanks, Arvind, and good morning, everyone. We appreciate you joining us today. Looking at our first quarter, we're very pleased with our performance, but Q1 reinforced something more fundamental about YETI, the earnings power of the model. Demand is more diversified, our platforms are scaling more efficiently, and our operating system continues to execute with discipline in a dynamic and often unpredictable environment. Importantly, we've entered the second quarter with global demand trends showing strength, continuing momentum from the last 2 quarters.

Scott will walk through the financials and outlook in detail, so I'm going to focus my time on what matters most from an investor perspective. What is getting structurally better in the business, why our advantages are durable and defensible and why we believe YETI is positioned to deliver sustained growth and compound value over time. I'll start with 4 key takeaways from Q1. First, demand for YETI is resilient, diversified and increasingly repeatable. In the quarter, we saw broad-based strength across categories and channels. That diversification matters because it reduces reliance on any single product cycle or channel dynamic and allows us to invest consistently behind innovation, brand and capabilities without chasing short-term volatility. Across our core product platforms of Drinkware and Coolers and equipment, performance was driven by the right assortment, augmented by innovation and amplified by our omnichannel model. That combination continues to be a strategic advantage.

Second, our business is delivering strong growth as we are moving past some of the market dynamics and supply disruptions that we faced last year. Importantly, we're broadening our customer base while building upon our core. Innovation continues to attract customers, particularly in newer categories like bags, soft coolers and sports hydration drinkware, while repeat purchasing and retention remains strong. At yeti.com, 12-month retention held steady, while lifetime value continued to grow. Our consumer metrics reinforce this strength. In the U.S., brand awareness, consideration and preference increased across coolers, drinkware and bags, with bags reaching their highest levels since tracking began in 2022. Brand NPS remained healthy across demographic groups. Product satisfaction is approximately 98% and nearly 2/3 of our survey customers now own products across multiple categories. Taken together, these indicators point to a brand that is expanding its reach while maintaining its promise, which is exactly what we aim to deliver.

Globally, we continue to accelerate to scale with strong economics. This remains a compelling and addressable long-term growth opportunity, and we are still early in unlocking it, even with international trending towards 23-plus percent of full year sales in 2026. As Scott will discuss, we expect to deliver at our guided growth levels for international in 2026 with strong gross margins and overall contribution to YETI. Our approach internationally is deliberate and repeatable, right assortment, right distribution, localized activation and disciplined investment. In Europe, we continue to expand doors and invest in awareness with improving productivity in our top accounts. In Asia, Japan is in the ramp phase, while Southeast Asia continues its rollout and China and Korea remain targeted for the second half of the year. Canada and Australia remain our largest international markets and despite macroeconomic pressures, we expect solid full year performance from both.

Third, Drinkware is proving it remains a scalable, durable platform. We delivered a second consecutive quarter of Drinkware growth with global drinkware up 5% year-over-year, including growth in sell-in and sell-through in the U.S. This performance was not driven by a single hero SKU. The key point is that growth is broadening across the platform, supported by refreshed core products, targeted extensions and disciplined pricing and promotional posture, reflecting innovation and newness including stackable cups, chug bottles, ceramic mugs and the Yonder Shaker bottle. Drinkware today is about platform health, cadence and discipline and those are the drivers of durability.

Drinkware not only has a solid foundational cash-generative base but also drives incremental upside from proven adjacencies. We see additional runway deepening our presence in sport and fitness hydration which continue to attract younger consumers and new use cases, making it additive to the platform and expanding the addressable market over time.

Shifting to Coolers and Equipment. In Coolers and Equipment, we delivered double-digit growth led by soft coolers and bags, Daytrip and Camino continue to outperform, extending YETI further into everyday use while remaining true to our heritage of toughness and reliability where supply has been constrained, demand remains strong. Fill rates in certain soft cooler and bag programs ran short through 2025 and into Q1 2026, with demand carrying through into the current year. Additional capacity coming in the back half of the year should allow us to better capture that demand. That matters for 2 reasons. It's a near-term growth lever as availability improves and it reinforces the long-term opportunity in our ecosystem of bags, soft coolers and carry solutions used repeatedly across everyday occasions.

In hard coolers, seasonal color innovation supported the category as we lapped prior year product transitions. Cargo performed well across platforms with particular strength in the GoBox 1 protective case establishing a foundation for future expansion coming in 2026. Fourth, wholesale momentum is validating brand strength and product relevance.

Global wholesale grew 19% year-over-year, our strongest wholesale quarter in more than 3 years, driven by consumer pull across both U.S. and international markets. The headline growth is notable, but what matters most is what's underneath it. Double-digit sell-through growth in the U.S., balanced inventory positions and strong partner confidence in our expanding innovation pipeline. U.S. wholesale inventories remain well managed and aligned with demand across major categories. Our approach to the channel remains disciplined and consistent, protect brand presentation, maintain premium positioning and prioritize long-term shelf productivity, not short-term volume.

Within D2C, demand was strong across e-commerce, Amazon and YETI stores, offset by softer corporate sales. Importantly, underlying consumer demand across our owned and marketplace channels tracked well with our overall growth. Performance was driven by seasonal color launches, expanded customization and meaningful enhancements to our U.S. and Canadian websites, improving conversion, add to cart rates and average order value.

We also continue to invest in digital capabilities like our AI-driven shopping assistant Ranger. Ranger enhances consumer experience, improves conversion and scales efficiently as our assortment grows. We view it as a long-term capability, not a short-term tactic. We recently launched our TikTok shop and are approaching it deliberately as a channel for authentic storytelling and reaching younger consumers. We'll scale based on performance, repeat behavior and brand standards. While corporate sales was softer due to order timing and a slower global corporate environment, we are managing this channel pragmatically. It is attractive, but we will not chase volume at the expense of brand integrity or pricing discipline. The bottom line, the year-over-year performance in D2C was driven by corporate sales timing in a more cautious global corporate environment, not a change in consumer engagement with the brand. As we think about our P&L resilience and opportunity, the discipline with which we are executing is especially important in the current environment.

As Scott will walk through in more detail, we're navigating peak tariff impact in the first half with second half gross margins recovering most of the year-over-year pressure. The structural margin drivers of mix, sourcing and pricing are counterbalancing cyclical inputs, including tariffs and costs related to global energy pricing. We believe these are known and transient headwinds, not long-term structural issues. Our diversified supply chain and pricing discipline gives us flexibility. And as we move through the year and lap some of these impacts, we expect margin performance to improve while continuing to invest behind the brand and innovation.

Turning to why YETI's advantages are durable and defensible. We believe YETI's moat rests on 3 reinforcing pillars. First, brand trust and authenticity. YETI's not a logo. It's a broad reputation earned over time. As you may have seen in our recent 4-letter brand campaign and platform released last week. Consumers choose YETI because they believe it will perform, it will last and it will be designed with purpose. That trust drives consumer pull, supports premium positioning, increases repeat behavior and lowers marketing friction. It also makes innovation more efficient because consumers are willing to adopt what we build next.

When a brand owns trust in its categories, it creates a durable advantage that is difficult to replicate. Second, scalable product platforms. We build platforms not one-off products. Platforms like drinkware and coolers and equipment allow us to reuse design DNA, supply chain expertise and brand credibility while expanding usage occasions and deepening consumer relationships. As we look at products launched in the last 24 months, these generally represent approximately 25% to 30% of sales in key categories as we continue to shorten development cycles and improve speed to market, driving innovation. While innovation plays a key role, this also displays the power and impact of legacy products as these continue to capture a long tail benefit, reinforcing the product development stacking effect. This is how we generate compounding returns, strong base, meaningful improvements, thoughtful extensions and new use cases that fit the brand and strengthen the ecosystem.

Third, a disciplined global omnichannel model. Wholesale expands reach and discovery, owned DTC deepens engagement and loyalty. Marketplaces add access and convenience and corporate sales drives engagement. When managed with discipline, these channels reinforce each other and reduce the reliance on any single source of demand, increasing resilience across cycles. Overall, YETI's built for upside and for durability against positive brand momentum and global demand, we have a differentiated brand with loyal consumers, scalable product platforms that refresh demand, a diversified omnichannel model and a flexible, diversified supply chain. And we pair that with a fortress balance sheet, more than $425 million in liquidity and approximately $70 million in debt and a strong free cash flow with roughly $500 million returned to shareholders through share repurchases over the past 2 years, and an upsized $500 million share repurchase authorization, all while maintaining the ability to invest through cycles and allocate capital opportunistically.

Let me close by being explicit about why we believe YETI can deliver sustained growth and compound value over time. First, brand power compounds as YETI shows up in more everyday moments, brand meaning deepens, supporting pricing integrity, repeat purchase and lifetime value. Second, platform scalability improves efficiency and reduces risk. Extending platforms allow us to grow with discipline while maintaining premium standards. Third, international runway is real and still early. Premium performance-oriented brands can travel when built with authenticity and executed with discipline. Fourth, omnichannel diversification increases resilience. Discovery, loyalty and access work together to reduce volatility. Fifth, operational discipline supports per share value creation. Strong cash generation funds innovation, expansion and disciplined capital returns. This is a company with durable advantages and a clear path to compounding across cycles.

And taken together, these drivers support a long-term top line growth algorithm in the high single to low double-digit range, driven by core platform performance, new category adjacencies and international expansion. When combined with margin expansion and buybacks, we have a model with the potential to drive earnings and free cash flow faster than top line growth over time. Our guidance implies we'll be within that growth algorithm starting in 2026. We'll go deeper on our long-term growth algorithm, margin framework, innovation road map and capital allocation priorities at our Investor Day now targeted for September.

Stepping back, YETI is not a single product story, a single channel story or a single geography story. We're a brand-led platform business with multiple engines driven by authentic consumer demand enabled by scalable innovation platforms and strengthened by a diversified global omnichannel model. In a market that continues to shift, whether due to consumer behavior, promotional intensity, tariffs or geopolitical uncertainty, durability is the point. We built YETI to endure, to protect brand equity and to play offense when opportunities present themselves. That mindset has guided us for more than 20 years, and it continues to shape how we run the business today.

As we celebrate YETI's 20th anniversary this year, the first quarter reinforced our confidence in the strength of the brand the sustainability of demand and the operating system we've built. We are seeing continued momentum in Q2 and are excited about what's ahead as we continue to innovate, broaden the brand thoughtfully, and build a scalable global growth engine while maintaining discipline and compounding value over time. As always, I want to close with a thank you to our partners around the world and especially to the YETI team.

Before I turn the call over to Scott, I'll close by acknowledging what a pleasure it has been to have Scott join us during this incredible moment in time for YETI. He's off and running, helping drive our strategy and support our execution against YETI's potential. With that, I'll turn the call over to Scott.

Thanks, Matt, and good morning, everyone, and thank you for joining us. As many of you know, I joined YETI earlier this year, and I'm extremely excited about the opportunity ahead for this amazing company. YETI has built on the strong foundation of an authentic premium global brand supported by disciplined execution that results in a compelling growth algorithm. From YETI's IPO through 2025, sales have increased at a 13% compounded annual growth rate and adjusted EPS has grown at a 15% CAGR.

Over that same period, YETI has generated nearly $1.4 billion in free cash flow and reduced shares outstanding by 11%. International revenue mix has grown from 2% to 21% resulting in a truly global company with a diversified omnichannel model. Our key growth initiatives of reaching new audiences or category expansion and global expansion are each contributing in a meaningful way working together to sustain a long-term growth rate in the high single to low double-digit range.

With that, let's dive into our performance for the quarter, following which I'll provide an update on our outlook for 2026. After my prepared remarks, we look forward to your questions.

Our first quarter performance reinforces the strength of the brand and the durability of our long-term growth strategy. We began 2026 on a strong footing with an increasing momentum across key business segments coming out of Q4. Starting with our overall top line performance. In the first quarter, we delivered sales of $380.4 million or growth of 8.3% year-over-year. Growth was broad-based across categories and channels and came in at the top end of our initial full year outlook range of 6% to 8%. Turning to our performance by category. In Drinkware, sales grew 5% to $217 million, our second consecutive quarter of mid-single-digit growth in the category overall and a return to growth in the U.S. Drinkware business. These results reflect the durability of our drinkware business and our ability to drive sustained growth through innovation and audience expansion. Coolers & Equipment sales grew 11% to $156 million, with strong performance across soft coolers, bags, hard coolers, cases and storage.

Innovation in the category continues to drive our business as we bring new products to market and infuse color to support our core platforms. Daytrip and Camino remain standout performers, and consumer engagement for these products continues to be strong. While demand for these products is currently outpacing supply, our inventory position is improving and should support sustained growth in the category. Looking at our performance by channel. Wholesale sales increased 19% to $184 million, our best quarterly performance in more than 3 years. During Q1, sell-in trends were better aligned with sell-through trends, which have remained strong. Channel inventory remains healthy, which bodes well for performance in the wholesale channel in the upcoming quarters. Our teams are working closely with retail partners as they thoughtfully replenish inventory to support strong consumer demand across categories. Direct-to-consumer sales were flat at $197 million. Consumer demand was strong across our owned e-commerce, Amazon Marketplace and YETI retail stores with performance in these channels coming in line with our overall sales growth for the quarter.

However, sales in our corporate sales channel declined year-over-year, driven by caution from corporate buyers, challenging comparisons to last year's strong results and some order timing dynamics. As we look ahead, we're encouraged by the improvement we've seen in the trajectory of corporate sales thus far in the second quarter. Moving to our performance by region. In the U.S., sales increased 8% to $293 million, supported by growth across coolers and equipment and drinkware. Demand remained strong across wholesale, e-commerce, Amazon and retail, partially offset by softness in corporate sales. International sales grew 9% to $87 million, including FX favorability of approximately 800 basis points. Underlying consumer demand in our international markets remain strong. However, growth here in Q1 was impacted by a decline in corporate sales. As you saw in 2025, international growth can fluctuate quarter-to-quarter, but the long-term growth trajectory is as strong as ever, and we continue to estimate our international sales growth for the full year to be in the high teens to 20% range.

Our international focus remains on driving underlying consumer demand, strengthening brand equity and the significant runway ahead. As we expand consumer reach, deepen market penetration and scale in priority markets, we continue to build a scalable multi-market growth engine. Looking at our key international regions in Europe, consumer demand across categories and channels remains very strong, supported by rising brand awareness, expanding wholesale distribution and deepening engagement across markets. In Australia, while macro pressures weigh on discretionary spending, brand strength remains intact, and we continue to see a meaningful opportunity to expand YETI's presence over time. Performance in Canada was supported by customization, corporate sales and wholesale. In Japan, momentum continues to build, driven by expanded wholesale partnerships, the recent launch of our e-commerce platform and growing enthusiasm from consumers.

Now moving down the P&L. Adjusted gross profit was $210 million or 55.3% of sales, a decrease of 200 basis points versus last year. This included a 280 basis point headwind from higher tariff costs year-over-year as well as the unfavorable impact from a lower mix of our D2C channel. This is partially offset by lower product costs and the favorable impact of foreign currency exchange rates. Adjusted SG&A was $184 million, up 10% year-over-year. As a percentage of sales, adjusted SG&A grew 100 basis points to 48.3%, reflecting continued growth investments in facilities, including 2 new stores, sales and product development headcount to support our international expansion, and technology to support our digital businesses. Adjusted operating income declined 24% to $26.6 million or 7% of sales. Adjusted net income decreased 23% to $19.8 million or 5.2% of sales and adjusted EPS declined to $0.26 from $0.31. This year's results reflect an incremental unfavorable net tariff impact of approximately $0.09.

Turning to our balance sheet. We ended the first quarter with $127.8 million in cash as compared to $259 million in the prior year quarter. This year-over-year decline in cash is primarily related to the elevated level of share repurchases executed through 2025. We continue to manage our inventory effectively as inventory decreased 4% to $318 million. Total debt, excluding finance leases and unamortized deferred financing fees was approximately $73 million compared to $77 million at the end of last year's first quarter. We remain committed to investing in the business to drive sustainable growth and long-term shareholder value, with strong free cash flow generation and share repurchases. Now turning to our fiscal 2026 outlook. With strong Q1 performance, our confidence in the full year outlook is even greater. That said, Q1 is seasonally our smallest quarter of the year, and we recognize that it is still early in the year, and we're cognizant of the macroeconomic uncertainty that still exists.

Based on the Q1 sales momentum, we are raising the low end of our full year sales growth rate expectation. We now expect full year sales growth of 7% to 8% from the previous outlook of 6% to 8%. From a phasing perspective, we anticipate the total sales growth rate will be relatively consistent throughout the rest of the year. We are also reiterating our growth expectations across channels, categories and geographies. By category, we continue to expect high single-digit to low double-digit growth in coolers and equipment, supported by the momentum we see across soft coolers, bags, hard coolers, cases and storage. In Drinkware, we continue to expect mid-single-digit pacing for the year, driven by increased innovation, the continued broadening of our portfolio and global expansion. By channel, as a result of strong customer traffic and merchandising innovations at our wholesale partners, we expect wholesale channel to grow at a slightly faster rate than the direct-to-consumer channel this year. By region, in the U.S., we anticipate low to mid-single-digit growth for the full year.

As I mentioned earlier, we continue to project international growth in the high teens to 20% for the full year. With respect to gross margins, we are raising the lower end of our gross margin expectation for the year. We now expect full year gross margins at 56.5% to 57% compared to prior year guidance of 56% to 57%. At the midpoint, this is a 60 basis points decline year-over-year compared to our prior guidance of a 90 basis point decline. The increase reflects the benefit from lower realized tariff rates, partially offset by higher commodity and inbound transportation costs. Please note that our outlook does not include an assumption for the recovery of any potential IEEPA refunds given the significant uncertainty on the amount and timing around it.

From a phasing perspective, we expect year-over-year gross margins to decline by roughly 200 basis points in the first half of the year followed by year-over-year expansion of approximately 50 basis points in the second half as we lap the tariff impacts from the second half of 2025.

As it relates to OpEx, we expect full year growth of between 4% and 7% relative to 2025, reflecting operating leverage and ongoing cost discipline. From a phasing standpoint, we continue to expect higher OpEx growth in the first half, moderating in the back half, driven by the timing of our brand marketing spend and a return to a more normalized incentive compensation accrual pattern in 2026. We now expect 2026 adjusted operating income margin to be approximately 14.6%, up 20 basis points compared to 2025 and compared to our prior guidance. We now expect adjusted operating income growth of 8% to 10% for the full year, compared to prior guidance of 6% to 8% growth. Due to the year-over-year impact of tariffs, the shift of brand marketing timing and incentive compensation expenses in the first half of the year, we expect first half operating margins to decline by roughly 450 basis points offset by an approximate 350 basis point improvement in the second half.

Turning to the remaining P&L items in our guidance. We continue to expect an effective tax rate of approximately 24% and diluted shares outstanding of approximately 76.6 million compared to 81.6 million in 2025. This reflects the full year impact of nearly $300 million in share repurchases during 2025 as well as an additional $100 million in share repurchases planned for 2026. We expect adjusted earnings per diluted share of between $2.83 to $2.89, reflecting growth of 14% to 17% compared to prior year guidance of $2.77 to $2.83 or growth of 12% to 14%. This increase in EPS relative to our prior guidance reflects slightly higher operating margins of approximately 14.6% for the year versus our prior expectation of 14.4%. Capital expenditure expectations are unchanged and expected to be between $60 million and $70 million for the year.

We remain focused on investing and advancing our technology, launching innovative products and strengthening our supply chain. We continue to expect free cash flow of between $200 million and $225 million in 2026. As it relates to our share repurchase program, our Board recently increased our share repurchase authorization by approximately $350 million, bringing our total remaining outstanding authorization to $500 million. The first quarter marked a strong start to the year and reinforce the momentum we are seeing in the business. Our performance speaks to the durability and strength of our brand, we are incredibly grateful for the continued operational excellence of our global teams. With that, I'll turn the call back to the operator for Q&A.

[Operator Instructions]

Your first question comes from Randy Konik from Jefferies.

I guess I want to get a feel for your confidence in the high single-digit kind of revenue guidance for the year. You came in with a better-than-expected top line for the first quarter. And yet you talked about some holdbacks in the numbers with corporate sales down bag demand outstripping supply and then some international, I guess, some volatility there. So if we assume that corporate sales, I think you said were starting to improve bag supply will start to improve relative to demand later in the year, and I'm sure international doors are being opened. Do you feel pretty firm about this revenue guide on the top line? And then kind of how does that inform your view of what you said on the call of a high single-digit, low double-digit type of grower in the medium to long term?

Good morning, Randy, thanks for the question. I'll start with incredibly pleased with how the year started and including the comments we made on the call about the start to Q2. I think it shows both the durability and the potential of the model, our portfolio, our go-to-market, and our growth engine. And so we feel really good about the way the year is shaping up. And really on the back of the continued U.S. strength, the drinkware strength that we called out on the call, the acceleration in growth in coolers and equipment driven by the diversification of the product portfolio, in particular, the soft coolers and bags. So we feel really good about the model coming into the year and that it's intact.

The things -- the corporate sales in Q1 corporate sales can be -- they can be episodic. We saw some orders that didn't repeat this year that were in last year's number. But you roll over those, and we feel good about how the full year and we feel good about the trend that we're seeing in corporate sales. I think international continues to be an incredible opportunity. We have as strong a team as we've ever had. We're opening and accessing new markets. We're getting new placement. We're opening wholesale doors. We're continuing to drive the D2C business. So the feedback we continue to get is kind of all forward progress and feel good about the year, as you heard from Scott's comments. So coming out of Q1, going into Q2, the biggest part of our year is coming up, but that's really where YETI has shown it can excel. So we feel like the model is intact. We feel like the guide for the year with the raise today is solid and intact. And we continue to see the long-term growth algorithm and the buildup to it and the potential and chasing the possible.

And then just to elaborate on the comments around being able to grow EPS and free cash flow faster than the sales commentary. You've shown remarkable resilience in kind of managing through different kind of headwinds around that would impact margin structure. Can you kind of give us some things that you've kind of implemented over the last few years kind of help you manage through different little hiccups that kind of pop up, let's say, tariffs or as you pointed out, some rising input costs, what have you, that impact on margins, but you're offsetting that with some sourcing flexibility, pricing and mix in the channels.

Just kind of walk through what you've been doing and what you're doing going forward to kind of give continued confidence in the margins where they are today, and it sounds like margins are going to continue to move a little bit higher in the years ahead.

Yes. Thanks, Randy. There's a lot in there. I would start with when you look at our model, the diversification of our channels to market and our go-to-market and the replication of that globally gives us a lot of flexibility, resilience and opportunity. The second one is, over the last number of years, we've been talking about the broadening, strengthening, diversification of our product portfolio. which again gives us different price points, different use cases, different purchase occasions with a broadening consumer audience.

And so from a commercial go-to-market front end, a lot of levers for growth and durability. I think what you've seen over time is the incredible talent and flexibility we have in our supply chain, whether it was tariffs in the 2018, 2019 transition, the more recent tariff increases, the container cost evolution. We've been able to manage through those because we have built a nimble supply chain that can flex, and that's really on the back of an incredibly talented team that around the globe that drives that focus. What that allows us to do is have flexibility to support our go-to-market to support our product portfolios. It allows us the ability to generate the free cash flow that we've been able to generate while also absent what we would consider transient shocks or transient costs drive continued margin strength and all those lead to EPS -- compounding EPS growth.

And then the ability to leverage our free cash flow to return value to shareholders, and we've done that through buybacks as we've shown in the last couple of years and as we signaled for this year. So we feel like the model top to bottom is more resilient, stronger, more leverageable and lots of potential in front of it.

Your next question comes from Peter Benedict from Baird.

First, I just wanted to see, are there any other action plans in the strategy around corporate, kind of understand that, that's a -- can be an episodic business, Matt, as you said, but just curious if there's anything else going on beneath the surface in terms of how you're approaching it, how you're viewing it over the balance of the year. And if you can just give us a sense for the size of corporate. I think historically, it's been in the 20% to 25% of your DTC sales. I'm not sure if that's still the case and if there's any difference between the U.S. penetration and the international penetration. That's my first question.

Peter, thanks for the question. I'll take the front end of the corporate sales potential and then Scott can step in. What I would say is we continue to believe in the untapped potential in corporate sales. We see opportunity all over the place and that's not just in the U.S. but around the globe. Our corporate sales is made up of some big partnerships that we do, that we talked about. Some larger corporate orders, but then there's just an underlying hum to that business.

And I think we attack that in 3 different ways from an action plan and operational perspective. We have an active sales team that's out generating the opportunities that are in that kind of third bucket. That's really an action-oriented business. The second -- the big, bigger corporate orders, we're judicious about how many of those we want to take on because they can be lumpy. Both of those groups are really a sign of brand strength, demand, desirability of our products for a premium good. And then the partnerships bucket, as you've seen over the last couple of years, we've gone out and built globally some really powerful partnerships that work in a couple of different ways. They have a corporate sales component. They also have a brand, brand building, brand awareness, exposure component to it. And so we really think about our corporate sales in those 3 buckets of run rate corporate sales, large corporate orders and then partnerships.

And we have active teams that focus on all that. And that's really what we've turned on in Q2 after the slower start in Q1, and we'll continue to do it. It's just part of our operating rhythm.

And so just to add a little more color to that. The corporate sales business is approximately 25% of our D2C business overall. And while we haven't broken out the specific impact to corporate sales to D2C, I'd just leave you with the other pieces of that particular channel, our retail stores, yeti.com and our marketplace partners all grew high single digits for the quarter. So it gives you a sense for the impact that we saw from corporate sales to D2C.

All right. Great. My follow-up is just on the international and the growth outlook for the year, still high teens to 20%. I'm curious what the FX assumption is there, any view on kind of constant currency growth as you start to, I guess, ramp up things like Korea and China in the back half of the year and other things.

Yes. Sure. A couple of comments on international. Just as a reminder, the first quarter is less than 20% of our overall revenue for the year. So it's the smallest quarter by a meaningful margin. And so there is quarter-to-quarter noise that happens and we saw some of this in 2025. So we do get lumpiness of demand patterns from wholesale partners, overlapping large sales and corporate sales. So some of those things do weigh on the quarter and we saw that.

There was an FX tailwind that we saw in Q1 of approximately 800 basis points to total international growth. If you play that forward and you take that and quantify that impact for the full year, it mutes and we don't -- of course, we don't know where FX rates will land for the balance of the year. So we don't view that as a huge driver for the balance of the year. We expect the 18% to 20% includes a little bit of FX benefit of the observed amount from Q1, but we're not building it a lot as it relates to second, third and fourth quarters. So we feel really good about the underlying demand we're seeing across the international business. And it is again, some of the breadth of the power of the YETI model of having diverse channels, diverse markets, and we're seeing that strength, and we feel good about the trends that we've observed so far in Q2 for international.

Your next question comes from Phillip Blee from William Blair.

So there's a lot of puts and takes with gross margin right now between tariff changes, higher transportation costs, rising product input costs like resin. So can you maybe just walk through your exposure to these pressures? And then your level of confidence in being able to offset and then what role, if any additional price increases play? And then is there any reason we should assume that the gross margin decline year-over-year will get a little bit better in Q2 than where we were in Q1?

Great. So let me give you a little background on this. When we set the guide for 2026, we did so under the assumption that IEEPA tariff rates of approximately 20% would persist throughout the year. Obviously, that's a very fluid environment, and we've seen lots of changes there. In late February, those tariffs were overturned and replaced by the Section 122 tariffs at roughly half the rate. And so that change was not contemplated in our guide.

Now our base assumption at the moment is that those tariffs when the expiration of 122 occurs, they will resume back to the 20% range in July. Again, fluid situation. We'll see how that actually transpires. The net benefit from a tariff perspective of that change relative to our original guide was approximately $15 million. And then roughly 2/3 of that $15 million was offset by pressures that we've seen related to fuel prices and transportation, and other commodity inputs affecting our cost of goods. So the net benefit of that is about $5 million. But you see that's what we flew through in our new outlook and increased EPS by that, plus a little bit of a benefit for the demand lifting the bottom of the revenue guide as well.

So in aggregate, we feel like the changes that have happened reflect the net positive to the business. And then time will tell what happens in the back half as it relates to tariff rates, and we'll see if there's further upside from here.

Excellent. That's super helpful. And then I just wanted to touch a little bit more on Drinkware then. So notably, you inflected here in the first quarter in the U.S. market, can you talk about the drivers here? Has inventory normalized for the large volume straw formats that have been under pressure? How is shelf space trending at retailers? And then what's the contribution been from some of the newer product innovation that you've launched? And then do you think growth is sustainable here? Or should we expect U.S. drinkware to be up for the remainder of the year?

Phil, thanks for the question. We're really pleased with Drinkware and really looking back over the last couple of years, I think one of the things that was underappreciated over the last couple of years is the resilience of our Drinkware business and the execution of the strategy of diversifying our Drinkware to being something much bigger and broader and more durable than I think the market that really had driven the last couple of years. And so it gets to the point where we talked over the last number of quarters about inventory correction, but good consumer demand signals, and when was sell-in going to catch up to sell through.

What we saw this quarter was the continued consumer demand and the sell-through, but the sell-in coming back, which is really fill in from a shelf perspective but also the execution of the innovation. So I think largely for our business, largely that large-format straw type thing, has really settled out. But I think the more interesting is the execution of the strategy we've had, which is to diversify that business, our stackable cups, our sports hydration jugs, all really showing -- our chug bottles really all showing the strength in demand for YETI in the variety of use cases that we can target consumers. And that, to me, is really the proof point of the execution of the strategy, but also the potential as we go forward.

Your next question comes from Joe Altobello from Raymond James.

I guess I'll follow up on Drinkware. It sounds like you guys have sort of turned the corner here. I'm curious how much of that is execution as you called out? And how much of that is an easing in the promotional environment in that category?

Hey, Joe, I would call it -- I don't think it's an easing of the promotional environment. I think you're going to continue to see the broader clean up, continue. I think there's a tail to that. As we've talked about all last year. I think it's a long tail to some of that cleanup. I think for us, it's execution, innovation, incredible wholesale partnerships, innovation resonating with new and existing consumers. And so it's really the combination of those things.

And when I think about you look at YETI and how YETI is presented at wholesale now, you really see YETI as an ecosystem. So it's the soft coolers, it's the bags, it's the hard coolers, it's the storage cases and storage boxes and it's the Drinkware. And that is the platform that we're building. So it's not a categorical concentration. And really, our wholesale partners have been incredible. And what I would say is, those who have leaned into merchandising, those have leaned into assortment. Those have found making sure YETI intersects when consumers are shopping, have found incredible success. And that's really our drive. And so we feel great about the portfolio and the role that Drinkware is playing in that. In the U.S. and internationally, still for the majority of the portfolio still all discovery mode.

Very helpful. And just shifting gears over to the innovation pipeline. I think last year, you guys have kind of delayed some product launches, at least in the U.S. until the supply chain situation kind of resolved itself. Should we expect to see more new products this year versus the last 2 or 3 years?

I think there's a couple of things there. You're going to continue to see a strong cadence of new products this year across the portfolio. You've already seen it on the soft coolers and bags side. You've seen it on the Drinkware side, we've indicated that in the storage and cases, building off the success of the GoBox 1, you're going to see more of that. In absolute numbers, as we go through the year, as we work with our partners, as we look at what's productive on the shelf and what the opportunities are.

We moved some of those launches around. But the things that we talked about last year, those will be filtered into the launches this year, some of which we've had put out a limited release, we'll put out more fully some of the ceramic items in Drinkware that we talked about. So there's more to come, but I would say you won't see a significant change in our innovation cadence this year, I would call it kind of consistent plus, but we think that's the right rhythm for absorption into the market and delivering the results to support our guide for the year.

Your next question comes from Molly Baum from Morgan Stanley.

I just actually had 2 follow-ups from some prior questions that were asked. The first one is a follow-up on Peter's question on international. So is corporate sales a bigger -- I know it was a smaller quarter overall for the year, but as corporate sales a bigger portion of international than it is domestic? Or is it not really big enough to kind of call out the difference there? And then I guess as we think about the acceleration through the remainder of the year. Does that hinge on the introduction to China and Korea? Or are you expecting improvement in maybe some of these existing international markets as well?

Molly, thanks for the questions and thanks for the clarifying. What I would say corporate sales internationally, our mix is -- they're largely consistent, but international is more sensitive to those orders. And so what we had internationally, a little bit different than the U.S. was there were some significant year-over-year comp type orders that were last year that we knew weren't going to repeat this year, or they have a timing that didn't happen in Q1 again, but these partnerships have continued forward and so we expect that those will play out later in the year. And so the sensitivity is greater internationally just based on the absolute scale of our international business.

To the China and Korea thing that -- we talked about that later this year. I would not expect that to be a material driver in 2026. What we wanted to call out was these are the building blocks of long-term growth opportunity that support the algorithm. And so as we establish -- further establish the U.K. and Europe, as we build up Japan as we get some of our Southeast Asian markets kind of turning to scale, we want more markets in the pipeline for expansion, and that's why we call out China and Korea.

That was really helpful. And then another just follow-up on wholesale. Can you help us kind of reconcile the comments about the cautious or the continued cautious ordering environment from your corporate partners with the strong double-digit wholesale growth in the quarter and double-digit sell-through. Are you seeing really strong new channel partners, can you talk about some of those and then maybe what you're hearing from your corporate partners in terms of when maybe the strong sell-through may then flow through to stronger sell-in as we go through the year?

Yes, I'll start with the end. I mean I think we're -- I think you're starting to see the sell-in as a result of the strong consumer demand. That's been a number of quarters that we've talked about. And so I think you're seeing that, and I would say our conversations with our wholesale partners where they've seen into our product pipeline for the next 12 to 18 months. They know what's coming. We're collaboratively planning shelf space and merchandising and assortment and launch, and we've been doing that. Obviously, that's been part of our playbook.

And I think it's part of the reason you've continued to hear us talk about strong consumer demand and the sell-through we expected to sell into catch up or come towards the sell-through and then you start to see that in our Q1 results. I think when we think about kind of reconciling strong consumer demand in corporate sales, I think there's just different -- they're different consumer -- or the different buyers, they're different buying occasions. They have different sensitivities. We've been very pleased with the durability of the consumer demand and the elevated consumer demand and through all of our channels, our direct to consumer, as Scott pointed out, and our wholesale.

And on the corporate sales side, some of that is -- it's the beginning of the year, new budget cycles for a lot of companies, they go into that. I think the year is something that we're now very active in how we drive that corporate sales business. But I think the biggest takeaway is the way the model works and the diversification of our channels to market, give us the ability to go kind of win overall as YETI even if each of the individual pieces and parts isn't kind of hitting its full stride. So we're excited about the rest of the year.

Your next question comes from Peter Keith from Piper Sandler.

This is Sarah Morin on for Peter Keith. Congratulations on the great quarter. First, as it relates to the higher input costs, are there any situations where we could see shortages for resin? And then just any color around the incremental pricing actions that you guys could take to help offset?

Yes. We've not seen any restrictions on the availability of materials at this point. Obviously, it's something that we're watching, but we've not seen that as a concern for the quarter for the balance of the year. So that's not something we've contemplated in our financial algorithm here.

I think, Sarah, what I would add on the pricing topic, just maybe as a reminder in how we think about pricing. We think about pricing very strategically on how does the pricing fit within our product portfolio. We use pricing when we're trying to create gaps for innovation to slide into our stack. And so we tend to think about pricing as it relates to our portfolio, our fit. And we tend to talk about pricing as a no-regret type action versus a reactive action. So we're always thoughtful about pricing. We're thoughtful about the pricing, about our innovation in our in-line pricing. But there's kind of a more strategic lens we look at it versus a reaction to kind of a moment in time.

Got it. Okay. Very helpful. And then just going back to international, and then the softness in Q1. Just what changed in Q1 as it relates to softer demand backdrop without that FX benefit? And then can you talk a little bit more about the changes expected for the remainder of the year to hit the full year guide?

So look, again, as we mentioned earlier, the international business, Q1 is absolutely the smallest quarter. So it just makes it more subject to volatility. And we saw this last year as well, where wholesale partner lumpiness purchasing or corporate sales onetime effects that Matt mentioned a moment ago, can weigh heavier in the quarter.

Underneath that, and I recognize it's difficult for you to see, underneath that, we still see strong demand signals from our customers and the affinity for the brand continues to expand across the globe. So we see the demand signals. We see the energy that we're garnering in the new markets that we're entering and feel confident in the expectation of delivering high teens to 20% range for the year. So we think we're in a good position. We think the international teams are operating effectively and are delivering against our goals.

Your next question comes from Anna Glaessgen from B. Riley.

Just one for me. I want to follow up on the wholesale commentary from a prior question. The 19% growth in the quarter, really strong, supported by double-digit POS growth. Was there any particular subchannel that was particularly strong? I think in a prior question -- answer you said something to the effect of retailers who are merchandising the whole ecosystem are essentially doing better. Is that to be taken as if there's one particular couple of particular retailers that were driving the strength. Anything more there would be super helpful.

Thanks for the question and the clarification. I would say wholesale broadly, obviously, to drive that kind of sell-in and the commentary we had around sell-through broadly strength. So it's not -- the point I was trying to make is what we have found, and this is just a truism is the retailers that merchandise assort broadly that get YETI in good position in their stores, they see the results, and they see the impact of that.

So it was less a comment about that was the one that drove Q1. It's -- those are the ones that are seeing further elevated success. And we have incredible partners and great relationships and conversations around that, and we bring our learnings, our in-house team brings those learnings to our wholesale partners, and they give us feedback. So it's an incredibly collaborative partnership and the results are trackable and obvious. And so it's really the -- when YETI gets presented right, it sells. And I think you saw that in Q1, and that's why we feel good about the year.

Your next question comes from Noah Zatzkin from KeyBanc Capital Markets.

I guess first on the new ad campaign, I know we're maybe kind of 10 days in, but just any color on early reception there, who you're hoping the campaign resonates with as well as maybe any color on the timing of ad buys and format of ads.

Yes. Noah, thanks for asking that. So the campaign, I'll start with the campaign really as we talked about when we talked about the OpEx shift from Q4 to Q2, it's really a Q2 focused campaign. So I think you'll see it build through Q2. And that was a significant shift of moving the expense of the campaign we did, the bad idea campaign during the holidays to Q2. And the reason we did that was what we liked about this campaign and what we have seen in the early reception is the broad resonance of it, and it's really a brand campaign, not a transactional kind of end of year type campaign.

And so what we -- if you kind of watch it and you pay attention to the out-of-home, we're going to be running of which we started some of the cutdown we're doing in -- on the various digital channels. It's really about resonating with a wide audience. And the consumer seeing themselves in YETI. And so that long form 60-second or 30-second is really a reflection of the complexion of what YETI is today and where YETI is going. And so we saw this campaign as a way to come out and talk about the breadth and depth of our audience. It's not about the product we have. It's about the people that are attracted to this brand and supporting the amazing things that they do. And so we've been very pleased with the reception. It's been fun to watch the consumer engagement and then wanting to identify what their 4-letter word is and what's meaningful to them. Because I think that's how great brands are built on connection and relationship and emotion supported by incredible product. And I think that's what YETI's done for 20 years.

Great, really helpful. And then maybe just any color on how you're thinking about the Bags business, how it kind of performed in the quarter and how you're thinking about it for the rest of the year?

Yes. So really, really pleased and excited about the Bags business, probably as excited about the possible and potential built on the momentum we're seeing in the reception. And there's you've got this moment of some legacy YETI bags, like the Camino having an incredible moment combined with the momentum we're seeing in our Daytrip soft coolers, which have some bag elements to it and then the Pinnacle type Skala backpacks.

And the road map is incredibly exciting on where we can go the reception and relevance to us playing along that spectrum and the YETI brand being welcome accepted and respected in a very short period of time along that spectrum of bags and packs and luggage. I think that opportunity in front of us, not just in 2026, we expect 2026 to be a very good bags year. But it's really what '27, '28, '29 hold for that business.

And there are no further questions at this time. I will turn the call back over to the CEO, Matt, for closing remarks.

Thanks, everyone, for joining us today. We look forward to catching up with you on our Q2 call.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

Good morning, ladies and gentlemen and welcome to the YETI Holdings Q4 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Arvind Bhatia, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us to discuss YETI Holdings' Fourth Quarter Fiscal 2025 Results. Leading the call today will be Matt Reintjes, President and CEO; and Mike McMullen, CFO. Following our prepared remarks, we will open the call for your questions. Before we begin, we would like to remind you that some of the statements that we make today on this call may be considered forward-looking, and such forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. For more information, please refer to the risk factors detailed in our most recently filed Form 10-K and Form 10-Q.

We undertake no obligation to revise or update any forward-looking statements made today as a result of new information, future events or otherwise, except as required by law. Unless otherwise stated, our financial measures discussed on this call will be on a non-GAAP basis. We use non-GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release or in the presentation posted this morning to the Investor Relations section of our website at yeti.com. I would now like to turn the call over to Matt.

Thanks, Arvind, and good morning, everyone. I appreciate you joining today. The strong performance YETI delivered in Q4 is a direct result of growing brand strength and disciplined, consistent execution of our long-term strategy. Just as important, our Q4 results give us increasing conviction in the long-term trajectory of the brand, our ability to accelerate growth and profitability and to generate strong returns for our shareholders. There are 3 themes I want to emphasize this morning. First, our strong finish to 2025 sets the stage for meaningful global growth and profitability in 2026 and beyond. Second, our product innovation engine is operating with more speed, breadth and global capability than ever.

Third, our expanding global brand combined with a broader, higher-velocity product portfolio will be the driving force behind the next phase of YETI's growth. Beginning with our Q4 performance. We closed out 2025 with our strongest quarter of the year, delivering 5% net sales growth fueled by continued momentum across the YETI brand. Drinkware grew 6% and international delivered 25% growth, marking our best quarterly performance of the year for both. Gross margins exceeded expectations even in an intense tariff and promotional holiday environment, thanks to YETI's premium brand strength, innovation across the portfolio and operational execution.

We once again delivered strong full year free cash flow of $212 million, exceeding adjusted net income and underscoring the cash-generating strength of our operating model. We executed $125 million in share repurchases during Q4, bringing the full year total to approximately $300 million. Across the business, demand remains solid. Our portfolio is more diversified, more global and more durable with momentum across categories, channels and markets. This performance is a result of deliberate multiyear actions, grounding and broadening drinkware, expanding bags and soft coolers within coolers and equipment, investing in our innovation footprint, globalizing the brand and reinforcing supply chain diversification and resilience.

These decisions have positioned us well for sustained multiyear growth. Looking ahead, we entered 2026 with stronger global brand momentum and a broader product expansion opportunity than at any point in our history. While the consumer environment continues to be in debate, the fundamentals of our strategy remains sound, giving us conviction in our long-term opportunity. For 2026, we expect 6% to 8% net sales growth, shaped by strength in our innovation pipeline and our brand and expanding global reach. Over the long term, we continue to see the path toward high-single-digit to low-double-digit growth. We remain grounded in the same strategic growth priorities that have guided us through the past few years, driving product innovation, broadening our brand and addressable market, expanding our goal presence.

These pillars position us well as we enter 2026 with a higher capacity innovation engine, solid global demand signal in a more diversified growth model. Product innovation, anchored and durability performance and design remains the foundation of our long-term growth strategy. The portfolio is built on the strength of our 2 foundational categories, Drinkware and Coolers and equipment, and 13 unique and scalable product platforms. Importantly, we entered 2026 with one of our strongest pipelines in years, supported by innovation teams across Austin, Bosman, Denver, Thailand and Vietnam, enabling a robust global innovation cycle, allowing us to prototype faster, expand categories more efficiently and bring a global scale to product development.

Turning to Drinkware. We delivered 6% global growth in Q4, bolstered by innovation and expansion offsetting category cleanup discussed throughout 2025. While certain trend-driven styles in the category remained highly promotional, our broadening product platforms drove the business. And we entered 2026 with a refreshed assortment, stronger global traction and clear line of sight to continued growth. In 2025, we further broadened our definition of the Drinkware category. Today, we innovate across 4 platforms: bottles and jugs, cups, mugs and tumblers; tableware, coffee ware, barware and containers; and finally, cookware.

Let me share a few examples of recent expansion. We launched the silo 40-ounce and half gallon jugs both the job site and the sidelines, broadened our health and wellness assortment with the Yonder shaker bottles, added new high-capacity leakproof products with travel strawmugs, expanded color and personalization capabilities, including collegiate, NFL and Team Inspire designs and recently extended our premium ceramic line formats in Drinkware. We also advanced our lineup through early limited release carbon steel cookware and grew our offering in vacuum sealed food jars and bolts. We have additional innovation waves planned for 2026 and supporting the acceleration we expect during the year. These initiatives create broader uses for consumers, expanding our addressable market beyond traditional drinkware.

Demand in coolers and equipment remains exceptionally healthy with strong sell-through across trip soft cooler bags and Camino totes. Camino continued to broaden consumer reach, while day trip remained a standout performer in soft cooler bags. In hard coolers, we lapped a tough comparison with the very successful 2024 innovation and key product transition from a year ago. Overall, hard coolers continues to be a core product platform with particular consumer demand for high-performing more personal-sized coolers. We also saw strong interest in protective cases and the introduction of the GoBox One created a compelling entry price point into the platform with more products to come in 2026. While overall category sell-through was strong, sell-in was constrained by supply limitations, most notably in day trip soft cooler bag and Camino.

Importantly, we expect healthy growth in 2026 as new production capacity comes online in the first half of the year. We are combining improved supply with some of our most exciting C&E innovation, which continues at enough temple pace, including newly released day trip snack boxes plus additional innovation across the Dachi family coming later this year. Last week's launch of Scala, our first family of hike packs, deepening YETI's presence in bags and again showcasing the impact of high return, targeted inorganic innovation, fueled rapid YETI caliber expansion. The broadening in the Camino Tote family, innovation within the Rodi family of hard coolers in a personal everyday use format and continued expansion of the GoBox family with small to large format cases in storage.

On Scala, it marks YETI's entry into the trail focused women's and men's packs, combining the proven foundational DNA from our mystery ranch packs with a new design from our Denver Design Group, in a category consumers have been asking us to enter. Bill for durability, comfort and easy access, Scola's hikers and outdoor explorers, opening a meaningful expansion in the core outdoor environment. Across the board, innovation delivered throughout 2025, and alongside upcoming 20 to 26 launches, reinforces our product leadership and long-term category expansion opportunities.

Our second strategic priority is expanding brand reach. During the 2025 holiday season, YETI delivered a broad campaign across some of the biggest moments in sports and entertainment, generating more than 240 million high-impact impressions. Coming off the holiday momentum, our Spring 2026 campaign, targeting 400 million impressions, we'll continue to lean into the biggest and best cultural moments in sports, streaming and entertainment. In Q4, our team executed more than 60 global activations across pursuits such as sports, fitness, fishing, surf, equestrian, camping, motorsports and culinary. These events strengthen brand presence across global markets, helping drive discovery, engagement and long-term affinity.

Our sports expansion strategy continues to gain momentum, supported by expanded licensing agreements and deeper partnerships across major leagues in college sports. Globally, our brand footprint expanded meaningfully through high-impact activations in the U.K., deeper presence across European outdoor, mountain cultural and festival events and the debut of YETI's partnership with Land Rovers Defender highlighted during the 2026 to car Rally. This partnership allowed Geiger to support drivers, co-drivers and crews across the 2-week 5,000-kilometer desert race, reinforcing YETI's performance credibility in one of the world's harshest environments. Collectively, these brand-building efforts, powered by local creative, on-site customization and targeted retail partnerships continue to deepen global awareness and relevance. Underpinning our momentum is a healthy consumer foundation. Across our markets, we continue to see strong advocacy among YETI owners an extensive opportunity for multi-category ownership.

Our omnichannel strategy remains a competitive advantage, providing resilience across changing market conditions and ensuring a consistent premium brand experience. U.S. wholesale showed ongoing buying caution as inventory planning remains tight among many partners with our tracked channel inventory down significantly in 2025. Sell-through continued to outpace sell-in, supporting confidence in underlying demand for the brand and innovation and sustained momentum heading into 2026. We are also encouraged by the opportunities we see with new strategic distribution partners, which broaden the brand's reach and support our expanding product portfolio. Across DTC, disciplined execution delivered balanced performance. YETI-owned e-commerce remains a key channel and focus for us.

We saw strong engagement around innovation, limited additions and customization, offset by what we believe in the U.S. is elevated cross-channel shopping impacting traffic and increased promotional activity. AI-driven improvements in product discovery, search and UX are helping drive conversion on yeti.com and our conversational shopping assistant Ranger, continues to evolve as an important part of the consumer on-site journey. Amazon remains an effective reach engine, driven by improved in-stock levels, targeted ad spend and stronger product content, innovation like the Yonder Shaker bottle quickly climbed the must-buy list.

Corporate sales delivered another healthy quarter through reach, customization capabilities and a broadening product assortment. Our retail stores continue to reinforce the importance of physical immersion and product discovery. We saw healthy conversion across our store footprint, strong interest in innovation and great attachment within store customization. While the channel remains solidly profitable, driving traffic through continued enhancements in visual merchandising and localized assortments remains a key focus. Across all channels, our strategy is unchanged, maintain our premium positioning, protect channel integrity and use our diversified footprint to drive reach and profitability when and where the consumer is.

Our third strategic priority, expanding globally, continues to deliver strong results and represents one of YETI's most compelling long-term growth drivers. We believe our international addressable market exceeds the U.S. and we expect international growth to continue to drive strong results. Since our IPO, international has grown from just 2% of sales to 21% today, and we see meaningful runway for that mix to continue rising. Europe has great momentum across core markets with exceptional performance in the U.K. and growing traction in Germany and the broader DACH region. Our strategy is clear: scale the U.K. unlock dock extend across Europe. This is supported by a more powerful omnichannel model, improved wholesale fundamentals and elevated localized e-commerce experience and expanded Amazon presence.

And we're amplifying brand with a more robust marketing mix, bigger event presence in the U.K. and the DACH region, more locally relevant content, deeper community engagement, and partnerships that anchor YETI as a premier active and outdoor brand across Europe. Asia continues to accelerate. In Japan, we built the infrastructure for multiyear growth and remain on track for our e-commerce debut in 2026 with a doubled SKU lineup. Broader Asia expansion remains on track with strong progress toward other key markets, including Korea and China. Australia delivered its strongest quarter of the year driven by disciplined execution, strong color and product moments like cherry blossom and healthy sell-through. Canada closed the year with real momentum across wholesale, corporate sales and customization with what we believe is cautious but improved consumer sentiment entering 2026. Our global footprint continues to expand and the momentum is real. Our international performance shows we're reaching more markets, winning more consumers and building a long-term multi-market growth engine with significant runway.

Turning to supply chain. While tariffs remain a meaningful margin headwind in the first half, as Mike will discuss, our supply chain transformation continues to be a major success story. With our China diversification strategy yielding a massive shift in our exposure there, we are now focused on optimizing our global footprint as we navigate an evolving and complex tariff environment. While we've completed this phase of our multi-country diversification strategy with new factories live across multiple geographies, our attention now turns to optimization and the next expansionary moves to support our global business and cost efforts.

The suppliers to date are delivering the cost, quality and service we expect while collaborating to drive further efficiency gains and improvements. Our innovation centers and distribution hubs are operating with greater speed and productivity than ever based upon investments in automation and robotics. And we entered 2026 with a more resilient global and scalable supply chain model. Our capital allocation philosophy remains disciplined and balanced, anchored by a strong balance sheet and robust cash generation. We have tremendous flexibility to invest in innovation, brand building and global growth, while also returning capital to shareholders. As part of our growth strategy and disciplined approach to capital allocation, we're investing in foundational technology platforms, scalable digital and data infrastructure and transformative capabilities, including artificial intelligence.

These investments will strengthen the core of the business helping us connect more meaningfully with consumers and drive efficiency as we scale. This work will continue as we move forward. We are also advancing our work in AI across both consumer-facing and internal workflows. Externally, AI enhances product discovery, content optimization, recommendation engines and customer support, making the e-commerce experience more intuitive and personalized. Internally, we are applying AI to creative workflows, forecasting, marketing measurement, search optimization and operational automation. These initiatives improve precision, speed and efficiency and can also play a growing role in innovation, planning and strengthening brand relevance and margin structure well beyond 2026. As we've shared before, we look forward to hosting our Investor Day in Austin, and we'll be providing additional details on the event soon.

This day will allow us to provide a deeper dive into our long-term vision, growth algorithm, product pipeline and the significant opportunities ahead to drive profitable growth and margin expansion across global markets. Before turning the call over to Mike to walk through our financial results in more detail, I want to take a moment to discuss the leadership transition we announced earlier this morning. As we shared, Mike's last day in the CFO role at YETI will be February 22. We are grateful that Mike will continue to serve in an advisory capacity until the end of May to support a smooth and seamless transition.

It has been truly a privilege to work with Mike over the past decade, including the last 3 years as our CFO. He's played a meaningful role in the company's transformation, including helping lead YETI through our IPO in 2018. Mike has been a great partner to me and the strong results we reported today mark an appropriate send off from his successful tenure at YETI. At the same time, we're pleased to announce that Scott Bomar has been appointed to serve as our next CFO. Scott joins us from the Home Depot, where he most recently served as SVP of Finance, bringing decades of financial and operational leadership expertise across a large scale, complex and growing organization, across his time at the Home Depot and earlier as CFO of Deluxe.

He has consistently driven cost discipline, operational efficiency and margin improvement while focusing on long-term strategic priorities. He's also led data-driven teams responsible for building predictive insights and analytics. These experiences give us a lot of confidence as we continue to focus on scale and profitable growth at YETI. Scott will officially join us on February 23. We're excited to welcome him and look forward to his leadership as he builds on a strong foundation Mike helped to establish.

To wrap up, the product engine is cranking, the global momentum of our brand is real and the growth opportunities in the U.S. and in the global markets are obvious. We have an exceptionally strong team operating with focus and purpose and a diversified commercial model that has proven powerful and scalable. Passion for YETI across consumers, partners and communities is as strong as ever. With disciplined execution on our strategic priorities, we're confident in the ability to continue unlocking the global potential of YETI. Thank you to our team, our partners and our customers for your support and passion, leading to a strong finish to 2025 and a great setup for 2026 and beyond. With that, I'll now turn the call over to Mike.

Thanks for the kind words, Matt, and good morning, everyone. It has been an honor to serve as YETI's CFO. And over the past decade, I've had the privilege to work alongside an exceptional team through some of the most defining moments in the company's journey. As Matt mentioned, I will remain with the company in an advisory capacity through May 31, and will work closely with Matt and Scott to ensure a successful transition. I have tremendous confidence in YETI's leadership, strategy and long-term opportunity, and I'm excited to continue supporting the company and to follow its continued success. With that, I'll turn to our financial results for the fourth quarter and provide our outlook for 2026.

We look forward to taking your questions after my prepared remarks. As always, the results we will discuss today are on a non-GAAP basis unless otherwise noted. Let's begin with our top line performance. In the fourth quarter, we delivered adjusted net sales of $583.7 million, representing 5% year-over-year growth and our strongest quarterly performance of the year. Our growth in Q4 was well balanced across categories and channels and with exceptional growth in our international business. Turning to our performance by category. In Drinkware, sales grew 6% to $380 million. As we have noted, 2025 was a challenging year for Drinkware, reflecting U.S. market dynamics and the impact of our supply chain transformation. That said, we consistently communicated our expectations for improvement in Q4, and we were pleased to see that come through our results. Growth was driven by innovation, strong international demand and continued positive consumer response to our broad assortment in this category.

In the U.S., Drinkware sales were flat year-over-year despite a promotional market and continued cautious wholesale volume. Coolers & Equipment sales grew 2% to $192 million, a solid finish given DayTrip and Camino supply constraints and as we lapped exceptionally strong C&E growth of 17% in Q4 of last year. Soft coolers, bags and cargo continued to perform very well, reinforcing the multiyear growth opportunity in these categories. The combined strength of Drinkware and C&E further demonstrates the impact of our innovation engine, the breadth of our product portfolio and the significant global market opportunity in front of us.

Looking at our performance by channel. Direct-to-consumer sales grew 5% to $394 million. Growth was broad-based across all D2C channels, including Amazon Marketplace, corporate sales, our YETI retail stores and owned e-commerce. Wholesale sales increased 6% to $189 million, led by exceptional international performance across both Drinkware and Coolers & Equipment. In the U.S. wholesale channel sell-through continued to outpace our sales into the channel, once again driving a decline in inventory levels year-over-year. This cautious wholesale buying is a continuation of the trend we have seen throughout the year. Underlying consumer demand for our products remain strong and is an important indicator of the health of our brand, setting us up well for 2026.

Moving to our international business. sales outside the U.S. grew 25% to $136 million, our strongest quarterly performance of the year. This represents 23% of Q4 sales as compared to 20% of sales in the prior year period. Europe continued to deliver exceptional growth driven by rising brand awareness, deepening wholesale relationships and increased engagement in key markets. Australia also contributed its strongest performance of the year with balanced growth across categories and channels. In Japan, momentum continues to build, and we see significant growth opportunities ahead after laying a strong foundation in 2025.

Now moving down the P&L. Adjusted gross profit was $341 million or 58.4% of sales, down 180 basis points versus last year. This includes a 310 basis point gross headwind from higher tariff costs, partially offset by lower product costs and selective price increases implemented earlier in the year. Adjusted SG&A was $246 million, up 10% year-over-year. As a percentage of sales, adjusted SG&A grew 190 basis points to 42.2%, reflecting continued growth investments in marketing, technology, facilities and our global teams, partially offset by distribution and fulfillment leverage on higher sales. Adjusted operating income declined 14% to $94.7 million or 16.2% of adjusted sales, reflecting an approximately 250 basis point net impact from higher tariff costs. Adjusted net income decreased 15% to $71.8 million or 12.3% of sales and adjusted EPS declined to $0.92 from $1 inclusive of an unfavorable net tariff impact of approximately $0.15.

Turning to our balance sheet. We ended the fourth quarter with $188 million in cash as compared to $359 million in the prior year quarter. During the fourth quarter, we repurchased 3.1 million shares of YETI's common stock in the open market for $125 million, bringing the year-to-date total to 8.2 million shares for $298 million. As a reminder, over the past 2 years, we have returned approximately $500 million to shareholders in the form of buybacks, repurchasing over 13 million shares, which represents a 14% reduction in our shares outstanding over the period. Total debt, excluding finance leases and unamortized deferred financing fees was $74 million compared to $78 million at the end of last year's fourth quarter.

Our Q4 results clearly reflect the health of our brand and the strategic choices we have made to broaden our global reach, accelerate our product innovation engine and strengthen our operational foundation. Now turning to our outlook for fiscal 2026. We expect full year sales to grow between 6% and 8% versus fiscal 2025 as we continue to build on the momentum we saw in Q4. From a quarterly phasing perspective, we expect total sales growth rates to be relatively consistent throughout the year. By category, we anticipate high-single-digit to low-double-digit growth in coolers and equipment, supported by broad-based growth across all C&E categories and with specific strength in bags, soft coolers and cargo. From a phasing perspective, we expect coolers and equipment growth to be slightly stronger in the first half of the year compared to the second half.

We expect drinkware to grow at a mid-single-digit pace for the year, fueled by robust international demand, ongoing innovation and a continued broadening of our portfolio. We expect growth each quarter this year with slightly stronger growth in the second half of the year compared to the first half. From a channel perspective, we expect wholesale to grow at a slightly faster rate than D2C in fiscal 2026. Geographically, we expect international growth in the high teens to 20% range for the full year. In terms of phasing, we expect international growth to be relatively consistent throughout the year, and we anticipate U.S. growth to be in the low mid-single-digit range for the full year with consistent growth across quarters.

We expect 2026 gross margins of between 56% and 57%. At the midpoint of the range, this is down approximately 90 basis points year-over-year reflecting the annualization of a full year of tariffs, partially offset by continued supply chain cost reductions and selective price increases. Embedded in this guide is approximately 200 basis points of incremental impact from higher tariff costs in 2026, which will primarily impact us in the first half of the year. This headwind is on top of the 230 basis point gross tariff impact in 2025, which was concentrated in the back half of last year. Note, we are assuming that the tariffs that are in place today remain in place throughout 2026.

Given these dynamics from a phasing standpoint, we expect year-over-year gross margins to be down approximately 300 basis points in the first half of the year with the year-over-year decline greater in Q1. As we lap the full impact of tariffs in the second half of 2026, we expect second half gross margins to expand year-over-year as compared to 2025. In terms of OpEx, we expect full year growth of between 3% and 7% versus 2025, reflecting operating leverage and cost discipline. From a phasing perspective, we expect higher OpEx growth in the first half of the year versus the back half of the year. More specifically, we expect approximately 200 basis points of deleverage in the first half.

There are 2 discrete items that are driving this dynamic. First, our brand marketing spend will shift earlier in the year with the next phase of our campaign launching in the first half of 2026 versus a second half launch in 2025. Second, incentive compensation will return to a more consistent accrual pattern in 2026. In 2025, our incentive compensation accruals were reduced midyear following tariff announcements. We expect 2026 adjusted operating income margin to be approximately 14.4%, consistent with 2025, leading to adjusted operating income growth of 6% to 8% for the full year. Driven by the timing dynamics in gross margin and operating expenses that I just mentioned, which, again, are the unfavorable year-over-year impact of tariffs in the first half of the year and the timing shift of brand marketing and incentive compensation from the second half into the first half of the year, we expect first half operating margins to decline approximately 500 basis points, but we expect this to be fully offset by an approximately 400 basis points increase in the second half resulting in flat operating margins for the year.

Before we move down the rest of the P&L, I wanted to take a minute to comment on our gross margins and operating expenses in 2025 and 2026 and then provide some thoughts on the opportunities in these line items beyond 2026. In 2026, tariffs will add roughly $80 million to our cost of goods relative to 2024. That represents approximately 430 basis points of impact on our gross margins. Yet the midpoint of our 2026 gross margin guide, 56.5%, would imply only a 210 basis point decline over that same period. The difference represents our efforts to drive cost improvements and take pricing actions, which are helping to offset the impact of tariffs. As we move into the second half of 2026 and fully lapped tariffs, we expect those actions to drive year-over-year gross margin improvement with continued opportunity beyond 2026.

As for operating expenses, we have made targeted investments over the past several years to support product innovation, international expansion and global brand growth. As these initiatives scale in 2026, we expect to begin realizing operating expense leverage, and we expect that to continue beyond 2026 as well. In terms of the remaining P&L items in our guide, we expect an effective tax rate this year of approximately 24%. We expect full year 2026 diluted shares outstanding of approximately 76.6 million compared to 81.6 million in 2025. This reflects the full year impact of $298 million in share repurchases during 2025 as well as an additional $100 million in share repurchases planned for 2026.

We expect adjusted earnings per diluted share of between $2.77 and $2.83 in 2026, reflecting growth of 12% to 14%. Our 2026 guidance includes an incremental $0.35 net unfavorable impact from higher tariff costs versus 2025. Capital expenditures are expected to be between $60 million and $70 million for the full year. Our capital spending remains focused on advancing our technology, launching innovative products and strengthening our supply chain. We expect free cash flow of between $200 million and $225 million in 2026, which will be our fourth consecutive year of over $200 million in free cash flow. Note that our planned share repurchases and 2026 of $100 million represent approximately 50% of our free cash flow this year. We are proud of the strong finish to 2025 and the momentum we are carrying into the year ahead. Our performance reflects not only the strength of the brand, but the operational discipline and strategic execution of our teams around the world. With that, I'll turn the call back to the operator for Q&A.

[Operator Instructions] Your first question comes from Peter Benedick with Baird.

This is [indiscernible] on for Peter. First one on pricing. Mike, you mentioned taking some select increases this year. You guys mentioned the select increases from Q2 of last year. Can you share any more details on that front? And then on tariffs, are you thinking about potential relief in the event that Supreme Court overturns any recent policy on those?

Thanks for the question. So I'll take the first part of it. On the pricing side, I think the simplest way to think about it is it's going to be similar to what we did last year in terms of timing in terms of scope, in terms of impact. So last year, pricing had roughly a 40 basis point impact on our gross margin. And I would expect a similar level this year. I think -- and we announced the price moves last year in Q1, and the timing will be similar this year as well.

And when we turn to tariffs for avoidance of any confusion, any relief from tariffs is not contemplated right now on our guide. I think obviously, there's a lot of unknowns both on if the timing and the size of any potential relief. I think the way we would approach it is, as we have always done, be really flexible and the opportunity to flow through and -- but also continue to invest in growth-focused initiatives, in particular, international growth, product expansion, brand expansion. And I think all those things are consistent with the way we run the business. And obviously, we're monitoring it closely and we'll know when we know. But up until that point, we're going to continue to drive the cost efficiency, we're going to drive the top line growth are going to drive the margin expansion opportunity over the short, mid and long term.

Your next question comes from Randy Konik with Jefferies.

I guess, Matt, first for you. Can you just kind of elaborate on just some of the foundational work you've been kind of working on for the international business from a mostly from a distribution standpoint, supply chain standpoint. And then you talked about some of the brand building efforts going on from a global perspective. Maybe give us some vantage point on where do you think we are from a brand awareness perspective and the different markets you're focused on and all that, that would be very helpful.

Thanks, Randy. So starting with the foundational work, I think we started our international expansion back in really 2017. And I mentioned on the call that in 2018, it was 2% of our sales. This year, we just 25%. We just wrapped it 21%. When it was 2%, people would ask how big could it be? Now that we're at 21% and showing the momentum that we have behind that business, and we have established teams in -- across Europe. We have established teams in Japan and expanding throughout Asia and an incredible team in Canada and an incredible team in Australia. I feel like we really have a lot of the pieces and foundation to drive the kind of growth that we saw in 2025 and that we saw in Q4 in particular.

So I think a lot of the elements are there. It's a really big focus for us, which is making sure we have the right structure, the right distribution. So a big focus of 2026 is building out our wholesale footprint, expanding our e-commerce capabilities in the regions in which we operate today, building out the kind of powerful corporate sales and partnerships piece. I mentioned Land Rover Defender is a great example of our team in the U.K. developing what ultimately was a global relationship. So I think those pieces are really falling into place in 2026 is a year of accelerating that. In addition, looking at new markets, and I called out on the call, both China and Korea as markets of interest for us in places where we're spending some energy and effort to get those established in addition to some of the markets that I mentioned on the Q3 call.

So feel really good about -- incredibly good about the team we have, I feel great about the strategy and feel even more bullish on the opportunity. We think about the events and activations, we're running much of the playbook that was successful in the U.S., and we've seen translate to our most established international markets in Canada and Australia. We're seeing it play really well in the U.K. And as recently as the last couple of weeks, ran an incredible event in Japan, where we supported a Mountain Sports snow event and I think those things are what give us the conviction and confidence of the international opportunity in that it's -- as I said on the call, we think it's a larger TAM for our product portfolio outside of the U.S. than in the U.S. and that the playbook is working.

Super helpful. And then I guess my last question would be, when you look at the international revenue guidance for '26 and the Drinkware guidance for '26, does that reflect a level of like conservatism or status quo? Because when you look at the exit rate of international in the fourth quarter, up 25%, you're adding, obviously, it sounds like new distribution, seems like international will be firmly -- will be firm in this year. And then when I think about drinkware, you have new products launching. I know that the wholesale channel has been conservative, but also give us maybe some perspective of how long those inventories are in wholesale such that the domestic market at least could potentially get a little bit better as we go through the year? Just want to get some perspective on what the guidance includes from a drinkware perspective and an international standpoint in particular? .

Randy, this is Mike. Thanks for the question. So I'll take each one in turn. In terms of the guide, so we said international first, high teens to 20% that's coming off a 25% growth in Q4. I mean, obviously, when we put out a guide, we want to feel good about that. But at the same time, when we look at the opportunities we have in front of us that we've talked about with you all consistently Europe, Asia. We're super excited about what's happening there. As for Drinkware, we said mid-single digit. That's coming off roughly 6% in Q4. I mean, again, I'd say the same thing holds. I mean, we're excited about innovation that we released, we're excited about the innovation we have coming, and we certainly think there's opportunity there when we look at just the global market as well as the U.S. market. As for inventory levels, we've now seen, I think it's several quarters in a row where inventory has been coming down year-over-year Three quarters in a row where sell-through has been outpaced -- sell-through growth has been outpacing sell-in growth.

We feel like we've got a prudent guide in terms of when we look at what the opportunity is, but our inventory levels are down meaningfully year-over-year. we think there's just caution overall for within wholesale dealers and specifically to the drink wear category. So -- but like I said, when we put a guide out, we want to feel good about it.

Your next question comes from Brooke Roach with Goldman Sachs.

Matt, Mike, I was hoping you could contextualize the sequential improvement that you're expecting in your core U.S. market to get to that low single to mid-single-digit range for the full year. How much of that improvement is driven by U.S. Drinkware? How much of that is driven by international -- and are there any new categories or new brand building investments that you're making that give you additional context achieving and exceeding that expectation. .

Yes. Brook, this is Mike. Thanks for the question. So correct. So when we gave the guide for the year, we said the U.S. would be in the low to mid-single-digit range coming off a year where we were down slightly, but we did see improvement in Q4. I think the biggest story in the U.S. has been the drink wear category. And I think we saw a stabilization there in -- and we think there are opportunities to continue to drive growth across all of our categories. The other thing that I think impacted us in the U.S. in Q4 was C&E had a had a relatively tough comp. I mean, globally, it was 17% growth. We had some new innovation we were lapping with a product transition we were lapping. And so I think that, again, similar to last question, when we put a guide out, we want to feel good about it. But we certainly believe that we have opportunity in the U.S. to continue to drive growth.

And then just a follow-up for you, Mike. Can you help contextualize the inflection that you expect to get in operating expense leverage as you move into the back half of this year and on a medium-term basis? One of the most important cost control and fixed cost expense opportunities that we should be looking out for?

Yes. So I think the story around OpEx this year is 2 things. One, we have made investments over the last -- in 2025 that we believe we will start to get leverage on for the year. There are some timing dynamics, however, with related to 2 line items that we discussed in my prepared remarks. One is the timing of our brand campaign. It was in Q4 of 2025. It will be in the first half of 2026 and -- and the second is around our incentive compensation accruals. And given what happened last year with tariffs when they were announced, there were some differences in timing of when those accruals took place. This year, we're planning for a more normal and consistent pattern.

So you normalize for those 2 things and that explains the first half, second half dynamic. But I think for the year, which is, in our view, the most important, but there's always going to be things that move dollars around from a quarter-to-quarter basis. But for the year, the investments we've made in facilities in 2025, the number of offices and facilities and locations we've talked about with you all, giving leverage on those, getting leverage on some of the technology investments that we have made, we feel good about our SG&A and starting to get leverage on some of those going forward.

Next question comes from Phillip Blee with William Blair.

Mike, it's been a pleasure, best of luck. You guys guided sales growth this year at 6% to 8%, but there are some easier comparisons with, I believe, 300 basis point headwind that you guys called out related to supply chain constraints and delays in new product launches that impacted 2025. And ramping up international and some new markets in Asia. So are there some other catalysts that maybe aren't as impactful this year that could help us bridge to your longer-term targets in the high-single to low-double-digit range?

Phillip, this is Matt. And thanks for the comment on Mike, I would echo -- he's been a great partner for 10 years, and we're really excited to get Scott on board for this next phase of YETI growth. Specifically, there's a lot of things that move around in that 6% to 8%. We talked about some wholesale caution and buying caution that impacted Q4 even with the strong results we delivered. I think the U.S. market is one we're watching closely. We're seeing a lot of really interesting green shoots both across the product portfolio and the expansion, but also, as Mike mentioned, the stabilization in Drinkware. To a question earlier, the international growth, we continue to see opportunity to accelerate international growth. We see new market opportunities, but those take some time to build into and to invest into. And so when you put all that together, it sums up and makes me feel great about the 6% to 8% guide coming out of the gate and what we were comparing against in 2025, both in the products that were launched in 2025, the ones that were delayed.

So I think as we go into this year and we see where the where the consumer is, how our domestic versus international markets develop, how our innovation comes to market. I think we'll obviously be talking about this every quarter throughout the year. But we feel like starting the year with a strong guide on the top line, feeling great with the momentum behind the brand feeling really strong about the pipeline we have in the product. And as you've seen most recently, the continued expansion, expansion in drinkware, expansion in day trip soft coolers, the most recent launch into our hike packs and our scalapack. So a lot of good things that we think will both in the short, mid- and long term pay off really well for YETI.

Okay. Great. That's really helpful. And then just quickly, as you continue to expand into new products and categories, how do you think about the opportunity to enter new points of distribution, like TikTok shop, potentially new national retailers or new segment of local independent retailers. And then is that the bigger opportunity? Or is it more about expanding your shelf space with existing wholesale partners?

Thanks, Phillip. Great question. I would say it's a combination of both. We have incredible wholesale partnerships today from some of the most passionate specialty all the way up to what I believe are some of the best retailers in the country in the U.S. and, frankly, operators in the world. So we always believe there's opportunity to continue to bring products that are relevant to those channels to market, merchandising as sort them well for the consumers that shop in those places. And so as we launch new products, we think about what fits in the channels we have today. There are also things in the product portfolio as we expand that open up really natural new points of distribution that makes sense and are complementary to the rest of the channels that we're in today. And those could be digital channels and those could be brick-and-mortar.

And that's really everything from as we've expanded more of our sport oriented offering as we expand our outdoor offering. There's lots of outdoor specialty and sports specialty that I think are really interesting places for YETI to expand and grow. I also think that our existing accounts have opportunity to continue to sort and manage the portfolio we have. And I think there's some emerging and some established digital channels that as shopping moves in a genic shopping becomes a bigger and bigger presence, I think there's an opportunity for YETI to play there. So we love the core of what we have. We'll always continue to stoke and focus on growing that, but I think there are complementary plays for us.

Next question comes from Peter Keith with Piper Sandler. .

This is Sara on for Peter. We just wanted to dig a little bit more into your advertising efforts. How vacant that was launched in November. So just wondering key learnings from that and how that's shaping your advertising focuses going forward. And then if there's any differences to call an international versus U.S. strategy on the advertising front?

Thanks, Sara. I appreciate the question. We were incredibly pleased, as we said in my remarks about Q4 November campaign that we internally called bad idea I think that what it showed us and what we believed going in is that live events, in particular, live sports, is 1 of the last great places where you have highly concentrated, high-quality viewership and focus and where they're sort of galvanizing moments. And I think that's only growing, and you're seeing with the passion around sports, the investment that's going behind sports. And so the opportunity to bring a YETI advertising broad-based campaign into those moments and intercept the consumer with something that is very of YETI and feels very YETI, we think was fantastic. And we saw that both in the high-impact impressions we got, but also the follow-up feedback we got on the campaign impact, which is what gives us the confidence as we go into 2026 and building upon that campaign. And we saw an opportunity to shift it from Q4 as Mike said, to the first half of this year, which is part of the OpEx SG&A conversation we just had.

But we see those moments as we get into the moms, dads and grads season and similarly, we're going to target sports, cultural events, activities where people are paying attention, and we can go hit really high impact -- high-impact impressions. And it keeps YETI top of mind. And I think that's an important thing. We have believe we have an incredibly deep rooted ground connected game. And this gives us more of a halo around the brand as we expand the product portfolio as we drive our channels to market as we expand globally. So that's the sort of evolution of marketing, but it's connecting to what we've always done successfully. And I think internationally, there will be elements of that, that will spill over and manage internationally also.

Okay. Great. And then just 1 on BTC. Any more insight on to what drove the lower conversion rate in Q3 and then the improvement in Q4 and looking to 2026, is this something that we should expect to continue and help drive stronger conversion?

Yes, a few things there. And we commented on this. I think that the movements we've seen around conversion really what we believe and what we've seen across our analytics and the privilege of having the diverse channels to market that we have is we get to see a good insight into consumer behavior. And what we saw is an increase what we believe is an increase in cross-channel shopping so people are checking, which is really driven by, I think, price discovery and making sure that people are getting the best deal not necessarily a deal, but I think in a promotional environment in promotional categories, you see consumers looking around and checking multiple places. And so I think for us, the benefit is you move between our incredible wholesale partners, our Amazon marketplace, yeti.com, there's a lot of opportunity for us to intersect and capture and convert a consumer. So I think that conversion is really a dynamic that we saw start to play as we saw consumers being more promotional oriented and more cross-channel shopping. .

Your next question comes from Joe Altobello with Raymond James. .

I guess first question, I wanted to ask about tariffs. You mentioned it was $0.35 headwind last year, expected to be another $0.35 headwind this year. which was a little surprising, at least to me because I know you guys have done a lot of work on the supply chain side to try to get that number down. And I realize there's some annualization of last year, but I still would have thought it would have been a little bit lower given you moved a lot of drinkware out of China that's coming over to the U.S. So maybe help us understand why that number isn't getting a little bit better.

Joe, it's Mike. Thanks for the question. So I mean it really comes down to the annualization. I mean we spent the first 4 months of the year at little to no tariff rates in April, things increased. China went to first very high and then down to around 30%. The rest of the world was roughly 10%. We had about 4 months of that and then we had the final 4 months at China at roughly 30% and the rest of the world at roughly 20%. And so now when we look forward, we'll have -- we are planning -- as Matt said, we're not planning for any change in tariff rate that's baked into our guide. But essentially, it's 20% in China and 20% in the rest of world, roughly. There's some variation there by country, but that's roughly what it is. So it really just comes down to the annualization of a full month of the 20% globally versus what we saw in 2025.

Okay. That's helpful. And just a follow-up on the international side. I know you mentioned the addressable market is bigger than the U.S. Obviously, you've got a head start in the U.S., but is there anything structural about these markets, whether it's Japan or China, Korea, et cetera, that would make your penetration more difficult, whether it's competitive or cultural, fewer use cases, et cetera.

Yes, Joe, I would say when we look at TAMs, obviously, we're basing that on the analysis of products in those markets and the opportunity for us to wrap those. So we know -- the point being, we know there's established markets. So when we think about what's the best route to access. And so I would say, I don't think there's anything structural I think it's more what do you prioritize, how do you move into a market, your approach to the market. So some markets we've gone direct in those markets, and we've established teams. Japan is a good example of that. .

There are other markets where a 2-step distribution makes more sense because of the nature of the market, either the size opportunity, the complexity of access or just the priority. And so what I think you'll see us do, and we've talked about this on past calls, we're being very thoughtful about where do we want to be direct, where do we want to leverage partners in almost a river guide type style to navigate some of those complexities of the markets. But I don't see anything structural that would say there are markets that are off limits to us today.

Your next question comes from Brian McNamara with Canaccord Genuity.

Mike, I wish you the best here. I just wanted to get a few clarifying points on your guidance. I think you called out strength in bags. I believe on [indiscernible] were quite a couple of years ago that were expected to contribute about $35 million in sales. How big are bags today? Second is U.S. drink were expected to grow in your mid-single-digit drinkware guide? And then third, you mentioned sell-in being better than sell-through. I'm sorry, selling being better throughout 2025, do you believe we are finished with the destocking?

Brian, thank you for the words. I caught the first and third question. I may need you to repeat the second question, but bags, so we haven't broken it out specifically. But the one thing I wanted to clarify is that our bags business is broader than Mystery Ranch. I mean we're now -- we've now had 2 years of -- we bought the -- we purchased Mystery Ranch in early 2024. We had a bags business before that. We've leveraged a lot of the things that we acquired with Mystery Ranch to help build out our bags portfolio on the YETI side, and you're seeing the results of that. So well, we haven't broken it out. We have talked about it consistently being a driver of growth in 2025 and 2026. We think it's a significant global market opportunity for us and we're -- it's certainly an element of the C&E guide that -- or the guide that we provided for C&E in 2026.

The third question around sell-in versus sell-through. Like I said, we've had a couple of quarters where sell-through has exceeded sell-in. We do think while we're not planning for a significant inflection, we do believe that there will be more aligned in 2026. Our inventory levels are well below where they were last year as we've said. And so we'll continue to work with our partners on making sure we have the right inventory as our product portfolio grows and becomes more broader, we're super excited about the opportunities, both with partners where we've been for a long time as well as some of the newer ones that we've announced recently. So -- and Brian, apologies, if you could repeat the second part of your question, I can address that as well. .

We can move to the next question, operator.

Your next question comes from Noah Zatzkin with KeyBanc Capital.

I guess maybe just one on tariffs. As it relates to the, call it, $0.35 last year in the incremental this year. Any way to quantify how much of that is related to APA versus other tariffs? .

Yes. No. So what I would say is the vast majority of that is related to the EPA tariffs, which, as you all know, is currently what's under review at the U.S. Supreme Court. But it is the -- it is the majority of the cost that we've talked about.

And then maybe just one more on the kind of competitive environment. Any changes that you've seen play out over the last year to call out as you look into '26 maybe versus '25? And then any opportunity from a shelf space perspective related to that. And I guess, related to all of that, any thoughts around the promotional environment and maybe industry inventory of '26 relative to last year would be helpful.

Yes. No, I'll sort of rapid fire those things. I would say as it relates to shelf, we continue to obviously expand our product portfolio and continue to have conversations, really productive conversations with our wholesale partners on how we're going to merchandise the new things that YETI's seeing, and it's evidenced by if you go out today and the accounts where we have launched this into the additional space we received for our scala backpack, where that product makes sense and then the recent launches this year around expansion around sports jugs and colorways.

So we continue to have really good productive conversations but our wholesale partners don't have great relationships as it relates to our innovation and how we fit on the shelf. I think you and we talked about this all last year, I think we've seen a shift in the Drinkware category and the allocation of total space to that category. And I think all those things create opportunities for the innovation that we continue to push. As far as it's early in the year to call the promotional environment, but I think it's safe to assume that you're going to see some tail on that as wholesalers as brands continue to rotate out or down of their Drinkware inventory. And I think all that, for us, because of the strategy of broadening our Drinkware category and expanding the product innovation there is we continue to operate around that space and create product that we think has got a long-standing shelf-stable opportunity.

And changes in the competitive environment, I wouldn't call out anything specific other than the promotional environment we talked about, the transition that's happening in that concentrated part of the Drinkware portfolio. But in the rest of the portfolio, I feel like the rest of our Drinkware portfolio and the rest of our C&E portfolio, we continue to drive opportunity, which is what's driving and pacing the growth of the business.

I will now turn the call over to Matt for closing remarks.

Thanks, everyone, for joining us today. I want to conclude with thanking Mike for his partnership and welcoming Scott, and we look forward to seeing you all on our Q1 call. .

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

All right. Next up, we are excited to have a unique consumer brand that I'm sure needs no introduction for its innovative outdoor products. To help us understand how the company continues to evolve. We're excited to have CEO, Matt Reintjes as well as CFO, Mike McMullen, thanks for joining us today.

I'm going to start off on product innovation, and you've described the strategy as being anchored on this. So can you just step back and frame how your product innovation has evolved and also what you see as the next key growth drivers as we look out, not over next year, but maybe over the next 3 to 5 years?

Yes. No, and thanks for having us. Excited to be here. I would say products where we began. I mean it is -- the brand has really emerged because of the product, and it's been a focus from the very beginning, yet he started in 2006, so going on 20 years and really focused on driving durability, performance and design and product. And so when we think about that filter and what we apply it to, we just fell into 20 years ago into this hard cooler business.

But where we are today and you think about a business that's diversified across a wide range of Drinkware, the movement into bags and the expansion we've had in soft cooler bags, our legacy hard coolers and continue to drive innovation there. and then something else we're excited about is this growth in protective storage organization cases that provide all those things have this element of durability performance and designing them and then the brand has really been built built around that promise and that ethos.

And so maybe a follow-up there, which -- I guess, which of those categories are you seeing as maybe the biggest drivers from here? Is it truly more balanced? Or are there any that have higher returns than others as you look across the portfolio?

Yes. I mean I think, obviously, we've established a large opportunity, but also a large business in our Drinkware. And we continue to see innovation there and the expansion and the definition under that. And I think if you think about. We launched our first Drinkware in 2014 over the last 10-plus years of Drinkware, the diversification of use cases, giving consumers more reasons to engage and purchase the kind of redefinition away from just a cup or a tumbler into this broad-based food, beverage, a broader Drinkware.

And you're seeing that in our innovation strategy from individual use to more group offerings, whether that's in the culinary cooking world, whether that's in sideline sports, active jobs, larger format Drinkware. And so we think winning Drinkware has a lot of trends that we really like for the long term. The focus around hydration, the health and wellness benefits, the normalization of having a bottle or a cup with you constantly. We think all those are really interesting dynamics. But we're really excited about bags, and we're really excited about what bags can be from a global scale.

When we think about bags across three really growth -- significant growth vectors. Everyday bags travel broadly and then what we call pursuit bags, things that are more specific to active outdoor activity-based pursuits. And we think all those create growth platforms for us to continue to drive underneath this brand that we've built.

I want to dig into the Drinkware side a little bit more. But before we do, as you think about some of those categories, are there investments that you need to make as you expand into those? Or is it for the most part, you kind of have the platform set and it's just incremental?

Yes. I think it's -- we're really excited about the platforms that we have set in the capabilities that we have. The team the talent, the capacity to grow. And so if you were to look at our investor deck, you'll see what our most recent investor deck, after our Q3 call, you'll see we broke are two segments down into the growth in the product platforms below that. And that was really a nod to all of the different areas of innovation that we've been driving, but also the growth potential going forward. And so when we think about -- we set the platforms up then we have capability and capacity.

We recently talked about the expansion of our talent in Thailand or talent in this new innovation officer going to be building in Vietnam, gives us global capabilities, both from an innovation efficiency and almost a 24/7 clock but also close into contract manufacturing partners around the globe, connected back to the 3 product groups that we've established in Austin with kind of discrete teams that are focused on Drinkware in this food and beverage expansion in gear and equipment, which is our hard coolers and our cargo protective case storage boxes some of the pet products that you've seen even most recently in our Gear Garage through the Black Friday Cyber -- Cyber Monday event. And then our more soft good type products in our bags and soft cooler bags. And so, we have teams that wake up every day and care about those three groups and then we have capabilities that we built out around the globe to take advantage of the opportunity.

So to follow up on Drinkware. I think last quarter, you talked about this inflection going into the fourth quarter. How much of that is some of the new verticals that you're growing into food and beverage, things like that versus just the core is getting better.

I would say, I think what it really is, is the strategy is playing out. And the strategy we've talked about over the last few years is the continued diversification of our Drinkware portfolio. The increasing number of use cases for why a consumer domestically and globally would want to think about YETI as their Drinkware, food storage, food transportation, food prep and ultimately cooking solution.

And then I think the third one is obviously, over the last couple of years, there's been a lot of attention in the Drinkware category. A lot of growth driven off desirability, fashion, trend sort of cycling in and -- and I think when you look at YETI's performance during that time, we didn't ride the trend hard, and we aren't writing the trend hard on the other side. And I think that's really a testament to the underlying strength and diversification of the Drinkware business. And so as we look forward, we see Drinkware and this expanded definition of drink where being an important contributor to YETI's overall growth story.

Great. Maybe shifting gears to another important strategic priority for YETI, which is broadening the brand. I know you talked a lot about getting strengths with product innovation, but - starting at a high level, we still get questions from some investors, and I'm sure those that are new to the story about what drives competitive differentiation for YETI. So can you maybe walk us through the competitive boat or the secret sauce of the brand to support strong and sustainable ROIC?

Yes. It is reasonably simple. It's make great product, tell consumers why they should care about it and to support the things that are important to them. And I think that's what we've done from the very beginning is we brought product to market that had a shocking performance attribute and along that line of durability performance in design. We told consumers, and this is our brand building efforts, our marketing efforts, our partnerships, our engagement, why they should care why it's valuable to them. And then the third one that I think is incredibly important is we support the things that our consumers care about. And if you look at the way we've built this brand across communities, these enthusiasts, active communities.

You look at the things that we've done going all the way back in the fishing, surfing, skateboarding barbecue, Mountain Sports, we show up for our consumers in the places where they care and then the product fits in those environments and backs it up. this more recent conversation we've had a lot about our interest in sport and what's happening at Global sport. I believe that sports is the last great live entertainment source. And whether you're watching sports digitally live or whether you're participating in sport or whether you're attending sport, there's very few things like it in the global participation. And then below that, all of the different opportunities there. And we recently announced our partnership with League One Volleyball and the fast-growing interest in what's happening in professional women's volleyball the waterfall of that is down to the influence that it has at the club level in junior and youth level.

And so connection of a professional league all the way down to the Youth League with a really passionate followings incredibly strong. We just recently announced the National Women's Soccer League is a partnership with the National Women's Soccer League, and then we have these licensing partnerships across a lot of the other major sports and the things we're doing at the collegiate level. All of that is with an eye towards make product that's relevant for the environment, then tell people how your product can enhance whatever they're doing, whether that's sideline sports all the way up to the professional level. and then show up for them. And I think that's been a formula that's worked for us for the better part of our 20 years.

Got it. That makes sense. And you talked a lot about partnerships. But as you think about your marketing and advertising playbook going forward, what are the biggest shifts in how you're allocating spend across channels, whether it's digital retail media, influencers and what's driving those changes?

Yes. I mean we believe deeply that a foundation in endemic spend around marketing and brand is incredibly important because that sets your roots really deep. And then as you broaden out those routes will allow you to go do more broad-based things. So it's everything from deep endemic marketing, which we've traditionally had. We just ran our largest brand campaign over the last few weeks here in the U.S. And it was really focused on top of the funnel, brand awareness, allocating more to keep YETI as a brand top of mind because we think those routes are really deep in the specific areas, pursuits, communities in which we operate.

As we think about the lower and mid funnel, as we think about demand creation and performance marketing spend, one of the things we're watching really closely is where is the consumer discovering where is the consumer considering and then where is the consumer ultimately transacting. And we're dynamically allocating our dollars based on what we think is going to be a rapidly and continuous change to where consumers want to shop. I think it's also why we really focus on the diversity of our channels to market, the diverse wholesale channels to market, the diversity within our D2C business. Because at the end of the day, I want to be where consumers want to shop and changing consumer behavior is incredibly hard and incredibly costly, particularly in an environment where you have what I believe will be continued disruption across that discovery consideration and purchase. And so our focus is allocate dollars to where we think the demand is where the learning is happening.

Got it. And the last one I want to ask on the brand, just a follow-up because you talked about the new brand campaign during earnings. And again, just now, can you maybe give a little more detail on the significance of this new brand campaign, kind of how maybe how it compares to what you've done historically?

So we've done linear and Connected TV in the past, we run brand anthem kind of things. This was really, for us, what we believe is the start of a sequence of building top level kind of keep YETI top of mind out there in note consumer. So what was more significant about this one is we were very targeted in and thoughtful about the times we did it. We wanted -- and this ties back to the sports thing is the one thing people watch real time and live is sports. And so the campaign that's run over the last few weeks has been really targeted around major sporting events, the collegiate level at the professional level.

Because we want to capture consumers when we can get their attention, particularly in a noise or noisier environment. What's different about this. So this was in the fourth quarter, it had a little bit of a holiday theme. It wasn't just pure brand. It had an undertone of YETI in connection to the holidays. I think going forward, you're going to see us lean further and further into just keeping the brand out there, while we're doing all of this groundwork, this foundational route building route expanding work.

Maybe turning to the global expansion side of your priority list. How do you think about where that mix could go long term? And maybe tying into this change in marketing, is that across every single geography or is that more a U.S.-centric comment?

Yes. I'll start with -- it's probably less a change in marketing than an amplification of what we've done. And really, it's that allocation of as our portfolio has gotten broader as our audience is broader, as our channels to market get broader, the -- keeping those very bespoke targeted things, but the most efficient way to kind of bridge all of that is to have a halo over it. And so that's a little bit of the -- what I'll call the evolution versus transformative move in our marketing.

We got to say internationally, in our more established markets, they will start to benefit from some broader-based marketing, but this campaign was really -- this first campaign is really a U.S. -- really U.S.-focused. In our developing markets internationally, they will benefit more from the ground game than the air game. And so really, it's that focus on building those connections. The one asset that's been true for YETI since the very beginning is peer-to-peer referral is the highest form of discovery, and it's the that connection is the strongest form of you have to. You need to buy this cup or you need to buy this cooler or you have to have this bag. It's my favorite XYZ.

I think for where international can go I think about where we were in October 2018 and talking about going public and our international business was tiny and how big could it be? We're call it, 20% of our sales that are non-U.S. right now. So the top end of where it can be, I think, is much bigger than it is today. And then I look at the penetration and the potential we have in the U.K. and Europe, the Australia aside the relatively -- or significantly underdeveloped opportunity we have in Asia, the brand resonance that we're seeing globally, those early green shoots of opportunity and consumer reaction we're seeing. So we're excited about the international opportunity. We think that's going to be one of the pacing items for our growth going forward.

What are some of those green shoots that you're seeing? And how does that inform you where you want to allocate then more dollars and growing internationally?

Yes. I think Continental Europe, the opportunity to build out our wholesale footprint there. We're seeing one of the benefits of launching first in Europe in late 2019 was the quick disruption of wholesale there. So we had the opportunity to focus on building a strong e-commerce business. Over the last couple of years, we've been filling in the wholesale piece, but the e-comm business gives us an indication of where demand is, where the brand connection is. So that's given us the opportunity to go target markets. I think Central Europe, the doctor region fit with the brand, product relevance, highly engineered, highly designed products. And I think the incumbent market creates an opportunity for us to step right into it.

Japan, we've talked a lot about really launched in earnest in Japan this year. I think the Japanese market is really attractive. I think broader North Asia is really attractive. And then down the list of the big markets, China is right up there. You talked about in the last call some what I'll call sort of secondary and tertiary markets that we've entered efficiently through distribution. But when I think about Asia, it's really Japan, Korea or North Asia broadly and then China, are the really the three big opportunities.

And maybe remind us how you think about gross margin by different geographies and how that might evolve over time as well?

Yes. So what we've said pretty consistently is if you normalize for channel mix, the gross margins outside the U.S. are very similar to what we see in the U.S. The dynamic is the channel mix is different outside the U.S. So it's -- we're roughly 60-40 in total it's closer to 50-50 outside the U.S. And the driver of that is we just don't have our full D2C sales model. There are marketplace opportunities that we have not pursued outside the U.S. The corporate sales business is not at scale in many regions outside the U.S.

So -- but if you normalize for that, our gross margins are pretty similar to what we have in the U.S. From an op margin perspective, the markets where we've been in the longest, Canada, Australia, very profitable. the markets where we're investing, where we're growing the fastest Europe and then now Japan, obviously a little bit lower, but we expect those to improve over time, and then we'll get into new opportunities from there.

Maybe just one other quick follow-up on international. You alluded to direct-to-consumer kind of leading the business. Do you see any lead lag in terms of product categories as well and how that evolves over time?

Nothing that I would call out that's kind of material. I would say, as we continue to evolve the product portfolio, what it allows us to do in these newer markets is to actually think differently about go-to-market and think about merchandising. When we went into some of the early markets 7 years ago, we had what we had. And if we were going to be there, we're going to be there with the assortment. I think today, what it gives us the opportunity to establish the brand the way we want to bring a market relevant portion of our global product portfolio to really establish in a different way.

And so it's not -- you don't have to necessarily get the product it was YETI in the U.S. 10 years ago to be a relevant market. So that's the privilege of building out the product portfolio. There are markets around the world. We may be more known ultimately as a bags Drinkware brand and a hard cooler soft cooler brand. And I think that -- as long as it all stays consistent under the brand umbrella. I'm perfectly fine with that. I think I think it's great.

And one other one on the international side. Anything that you can share on the competitive front that might be different versus folks sitting in the U.S. that may be more used to seeing certain different types of competitors here, but maybe it's different overseas that we're not aware of.

Yes. I would say largely, no. There's a number of global competitors or offerings that are out there. There's always some local market folks, but I wouldn't say established, entrenched type competition. I think the biggest thing that you deal with is just different consumer behaviors. So just state the obvious size becomes a thing, drinking styles, what you're consuming could become a thing global coffee, global tea type markets versus cut full of ice large-format type thing. So I think it's more of that than there's a different competitive dynamic.

I think the other thing is market by market, the channels to market, how consumers buy, which markets are more digitally advanced versus kind of traditional brick-and-mortar. And so that's where we nuanced the model on the go-to-market, but I wouldn't say the competitive environment is fundamentally different.

Great. So then moving to -- we have some questions on capital allocation and some financial questions. But first, can you give an update on your capital allocation priorities? And more specifically, what drove your decision? You recently increased your share repurchase expectations for 2025.

Yes. So we said last quarter that we increased our share repurchase target in 2025 from $200 million to $300 million. But I'd say our capital allocation priorities have stayed pretty consistent. We want to invest in growth, both via internal capital investments. We want to find product-focused acquisition opportunities, and we want to continue to return capital to shareholders via buybacks. And you've seen us do all those things. We've had a relatively consistent amount of capital investments across technology, supply chain capacity, product development.

We've made in the last 2 years, made four product-focused acquisitions where we've acquired the IP, the technology, the design, the capabilities, the tooling around new products. And the most recent example of that is the summer we acquired the rights to a shaker bottle, and we're able to relaunch that under the YETI brand this quarter, and we're super excited about the opportunities that, that will give us from a growth perspective and access to a market that we believe is large and growing around protein shakes, supplements, et cetera.

And then last, capital allocation or share repurchase. We've in the last 2 years, including this year, we'll have repurchased $500 million worth of our stock. And what gives us the confidence to increase that? I mean, obviously, we have an incredibly strong balance sheet. We've been in a net cash position for a long time and continue to be in one. This year, we'll do approximately $200 million of free cash flow. That's on top of the roughly $450 million that we've done the last 2 years before this one. So it's just our ability to -- given the balance -- the strength of our balance sheet, our ability to generate consistent free cash flow. And then also when we look at our conviction and the growth opportunities ahead of us and where we trade, we believe it was an opportunity for us.

Got it. That makes sense. So maybe starting high level, just thinking about the consumer sentiment and wholesale sentiment, which you talked a lot about on past earnings calls. How are you thinking about consumer sentiment at this stage and particularly as we enter the fourth quarter and into 2026.

I mean, it's always tricky to kind of comment on how is the consumer doing? I would say our focus is what we know works when you drive brand desirability when you innovate in our categories, which are premium, but they're approachable price points, you can continue to drive consumer engagement. And I think we've seen that over time. I think one of the underappreciated aspects of the brand is the giftable nature of our products. And you have this interesting scenario where the relative purchase price of our products versus the value of the receipt of the gift is disproportionate. So you think about $30 or $35 up versus the joy of getting a custom cup with something on it for the holidays or a cooler or a backpack or so I think when you go through these times where there's broadly consumer uncertainty and is the consumer across different household incomes healthy or not healthy.

That's really where our focus is on driving that. And I think for this year, in particular, there's obviously a lot of noise in the system. And so for us, we look at '25 really as a setup year for 2026 and beyond. And the expansion and setting up of our Drinkware business, the expansion of our soft cooler bags and bags businesses, driving some innovation in our long-standing hard cooler business. Driving expansion in our protective case storage and organization products. So I really look at this year as a matter of will set up '26, and '26 sets up our long-term growth ambitions.

Got it. And so I have a few on gross margin here. Maybe I can ask them in sequence, but in the near term, can you -- you expect less than 5% of your cost of goods sold, exposed to U.S. tariffs out of China or to be exposed to U.S. tariffs to China by the end of 2025. How should we think about the annualized tariff impact as you continue to reduce your sourcing exposure from China? And then what do you view as an achievable long-term gross margin once normalize and one of the building blocks you see to get you there?

Yes. So first of all, I think we're very proud of our team and the work that they did this year to execute on what we asked of them, which was to accelerate our supply chain transition. It's something we set out to do a few years ago, but we really accelerated things this year, and we're very pleased with the work that they've done there. We talked about gross margin through 2025. We haven't given guidance beyond 2025 and 2026. We'll obviously have more to say on that, both in 2026 and the long term in our February earnings call and then follow up at the Investor Day that we've talked about would be in the first half of next year. But here's what I'd say around tariffs and the impact of tariffs on our gross margins.

Obviously, it's a -- it has been a challenging year and that from that perspective. As we look to next year, I mean, the majority of our tariff costs this year were on goods sourced in China and imported into the U.S. As you state, the volume that we'll purchase will be -- will go down in 2026 as we've largely transitioned. Number two, the rate recently went down from 30% to 20%. At the same time, we've got the tariffs that we pay rest of world where we only had a partial year this year, and we'll have to annualize that next year. And then we get into our mitigation levers. I mean we've shown a consistent ability to drive costs out of our supply chain. And we will continue to look at price as an opportunity. We took some pricing action early in this year before tariffs were announced, but we will continue to look at that as a lever as well. So Again, those are the factors that are driving it, and we'll have more to say on gross margins again in February and then at our Investor Day later in the first half.

Got it. And maybe just one follow-up there because you did cite a benefit last quarter from selective price increases. So how do you assess where you have additional pricing power without elevating any sort of promotional risk?

Yes. I mean what I'd say is that pricing is something that historically we have not used that lever consistently. I mean, we believe that consistency of price is important. When we are evaluating price, we look at a number of factors. We look at the relation of products within our portfolio. We look at where we stack up versus other products in the market. We obviously have our gross margin and profitability goals. And so what I'd say is it's just a -- we're going to do the right thing, balancing both profitability and growth and making sure that we continue to grow the business but do so profitably.

What was that price taken laterally across geographies? Or is it specific to the U.S. and individual categories?

It was heaviest in the U.S. I mean, we're always -- there may have been a few actions that we took outside the U.S. But by large, it was a U.S. pricing move.

Okay. And you said that you are hesitant to take price, but is that something where you've looked at the results then, and so that's something you'd be considering in those other markets is, hey, this is a testing ground because it's a bigger market to see how this played out? Or are those markets different just because they're more developing?

I would say -- I don't know if we're hesitant to take price. We're just really thoughtful about price. And one of the things people don't -- you talk a lot about price in general in relation to the market, we probably spend as much time thinking about price in relation to the rest of our product portfolio plus the innovation we have coming as we do what's competitive on the shelf. So when we see price opportunity, we take it. And I think that's kind of the process we're under right now. I would say, on the international, in general, we want to have harmonization globally on our pricing. And so the things that we would have taken price ex U.S., we're really around, okay, that -- there was a pricing mismatch between the U.S. and internationally or a mismatch in the -- in the product stack up that they had.

So we're not hesitant to take price internationally, we just don't take a lot of unilateral across-the-board price increases because we think from a -- the value from the consistency with the consumer is you end up with numbers that just get a little bit wonky and what they look like from a consumer perception. So historically, what we've done is -- and part of the reason, I think we were able to execute the supply chain transformation and historically drive cost out is these relationships we have with our suppliers to be able to work it from an operational side versus work it through just price.

I want to go back to something you mentioned in your remarks in the very beginning, which you referenced or alluded to disruption that could be happening or big changes that could be happening. It sounded like it was related to maybe marketing channels could be related technology. So I want you to maybe clarify what you were referencing. I don't know if it was an AI-specific comment and how that could change channel shifts.

Yes, I think it's broadly -- the speed of consumer behavior change can be disruptive around the models of how they how they purchase, where they purchase, when they purchase, why they purchase. And so yes, it could be Agentic shopping. It could be distributed commerce. It could be in environments where there's more discretion with consumer discretionary spend that they're multichannel shopping to make sure they get value. And that's one of the things that we've been watching closely is not just am I getting a deal on something but am I getting the right price.

And so you tend to see that's where the rise of marketplace is playing into it, what you're seeing in some of the reports out there around AI and Agentic shopping and how brands are showing up in recommendation list. And so that's more what I was talking about. And I think we're going into a period where the next coming months, years, I think you're going to continue to see that be topical.

So as a follow-up on that, how are you thinking about AI's impact on your business? Or how are you trying to plan to leverage AI more whether that's on the DTC side or more broadly?

I mean I think like a lot of people are trying to figure it out and figure out where the value pools are because there's a lot of -- there's for sure a lot of distraction and you can go a lot of different directions. And so what we focused on is things that we think drive or have the potential to drive growth in consumer engagement and things that we think have operational benefit. And so we called out on the call, we're using in some of the natural traditional places in our customer service, customer experience areas. We're using elements of it in product development, product design, we're using elements of it in marketing concept development.

But I think some of the more interesting yeti.com, we've now added an AI assistant on yeti.com, that helps with the shopping experience and the discovery, and we're starting to gather the data on the impact that has on the consumer journey. We're also focused on understanding these models and how we make sure that off-platform when somebody is using something for off-platform discovery that we show up in that search, and we called out on the last call some of the rankings that we're seeing there. And so it is we're active in those elements across the entire value chain from things that drive growth all the way through the things that drive efficiency.

Great. Maybe going back to drinker just for a question here. It's historically held, I think, 100 higher margin than the Coolers & Equipments side. Can you speak to the margin profile of new product introductions in the Drinkware segments of the cookware, shaker bottles, food storage, how they compare to legacy Drinkware and maybe holistically how you're thinking about mix going forward?

Yes. So that's right. I mean our Drinkware is roughly had 1,000 basis point been higher than coolers and equipment in total from a gross margin standpoint. I would say historically, we have some products that we developed that are above the average, some below, but it's largely consistent. And I'd say going forward, and the new products that we've released recently, is no different. We've got some products that have been higher than the average, some below. And whenever we do new product development, looking at gross margin, looking at cost, looking at price, looking at gross margin is certainly a piece of that and making sure that we sort of maintain healthy gross margins are part of it. So there's going to be some that are some above, some below, but largely consistent.

Got it. And one more on Drinkware. You talked about how sales for 2025 include a roughly 300 basis point negative impact from your supply chain diversification efforts. And I believe that's predominantly in Drinkware. So can you maybe give an update on, I guess, exactly what's been driving that and how you're feeling about whether there might be any lingering impact as you go into 2026 or if that completely goes away.

Yes. I mean what I'd say is the drivers of that, you're correct. It was largely Drinkware. It was us. As strong as this year has been from a new product development, new product launch standpoint. I mean we have had to shift some products out that we had planned, number one. Number two, for the first time, we made the decision to launch products, new products outside the U.S. first before we launched them in the U.S. We've never done that before, but that was from a capacity and inventory supply standpoint, that's what we had to do.

And then third, just the supply of new and existing products was lower than we've and where we typically run and typically targeted and you can see that in our inventory levels from a year-over-year standpoint. Just shifting the significant effort to shift the supply lines from China to other countries. It just limited us from a supply standpoint. I think that by the end of this year, we'll largely be there and as we get into the first half of next year. But it has been an impact on our growth this year.

Yes. We're just out of time. So please join me in thanking Matt and Mike for all the thoughts. Thank you.

Thank you.

Good morning, ladies and gentlemen, and welcome to the YETI Holdings Third Quarter 2025 Earnings Conference Call.

[Operator Instructions] Following the presentation, we will conduct a question-and-answer session. This call is being recorded on Thursday, November 6, 2025.

I would like I would now like to turn the conference over to Arvind Bhatia, Head of Investor Relations at YETI. Please go ahead.

Good morning, and thank you for joining us to discuss YETI Holdings' Third Quarter fiscal 2025 Results. Leading the call today will be Matt Reintjes, President and CEO and Mike McMullen, CFO. Following our prepared remarks, we will open the call for your questions.

Before we begin, we would like to remind you that some of the statements that we make today on this call may be considered forward-looking, and such forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. For more information, please refer to the risk factors detailed in our most recently filed Form 10-K and subsequent Form 10-Qs. Take no advisor update looking statements made today as a result of new information, future events or otherwise, except as required by law. Unless otherwise stated, our financial measures discussed on this call will be on a non-GAAP basis.

We use non-GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release or in the presentation posted this morning to the Investor Relations section of our website at yeti.com.

I would now like to turn the call over to Matt.

Thanks, Arvind, and good morning. YETI's third quarter performance highlights growing momentum from consistent and strong execution against our long-standing strategic priorities, driving product innovation, broadening our brand and addressable market and expanding our global presence. These initiatives are yielding meaningful results and building towards what we believe is a long-term top line growth range of high single to low double digits.

Our product innovation pipeline has never been more robust, extending and deepening our portfolio. Our brand is connecting with both legacy and new customers domestically and abroad. Our international growth is accelerating with exceptional performance in U.K. and Europe robust consumer demand in Australia and Canada and a great early read in Asia with more opportunity to come. Strong consumer demand for our products across channels and geographies, combined with recent innovation continues to reinforce the durability and growing relevance of the YETI brand.

This demand translated into top line growth, fueled by robust double-digit gains in our Coolers & Equipment category and our international markets. These results were achieved despite softer U.S. e-commerce performance and significant caution in wholesale selling, which created a notable gap compared to very strong double-digit sell-through across both Drinkware and Coolers as reported in that channel. The quarter underscores the strength of our diversified go-to-market strategy, our ability to meet the consumers shop and the accelerating impact of our international expansion.

Turning to growth and starting with product innovation. Our products continue to set the standard for durability, design and performance. Our 2 core categories, drinkware and Coolers and equipment anchor a dynamic portfolio built on 13 scalable product platforms fueling innovation and long-term growth. These platforms are featured in our updated quarterly highlights presentation available on our Investor Relations website.

Across these platforms, we are on track to launch more than 30 new products in 2025, even as we navigate strategic trade-offs to advance supply chain diversification. Importantly, we have a robust pipeline that is aligned with the continued momentum of our brand and positions us for sustained expansion. As we stoke the brand globally, we create natural opportunity for product innovation, expansion and vitality. Within Drinkware, the strength of our core portfolio and our uptempo focus on innovation is driving accelerated momentum despite ongoing wholesale inventory pressure and promotional intensity in the U.S. market.

Even as overall sell-in was down year-over-year in the U.S. wholesale, sell-through strength highlights the underlying momentum of YETI, in particular, the durability of our Drinkware business in that highly contested market. It reinforces our global strategy of building a sound foundation through diversification to set up for growth in Drinkware in Q4 and beyond.

Our innovation this year has spanned across several Drinkware platforms, showcasing the diversity and range of our portfolio. Recent launches include our insulated bottle updated Rambler drug ceramic line drinker and a cast iron ore [indiscernible] pan. Within the last 2 weeks, we launched our silo jug built for everything, from sports to job sites and outdoor. This is a that works not only for athletes but for anyone looking for large capacity, easy-to-access hydration with YETI cold holding power.

We believe this launch continues to position YETI as a go-to brand across a wide range of use environments and very naturally fit with our expanding focus on sports. Looking at the remainder of the year and into 2026, we're energized by feedback we've received from our partners about the innovation ahead in Drinkware, including the upcoming release of our YETI Shaker bottle, featuring a patented design that improves upon the standard shaker, providing an incredible mix experience while removing the traditional wire ball. This speed to launch is enabled by the acquisition of the design, tooling and IP we communicated in our second quarter call.

With the shaker bottle, which will be manufactured in the United States we are targeting a roughly $2.5 billion market, fueled by the rapid growing demand for hydration powders, protein supplements and wellness products, aligning with Yeti's expansion into sport, health and wellness. Early feedback from wholesale sports and health partners has been very positive.

The acquired design and IP comes from Helomics, which will cease operations as we relaunch an updated design to build upon the market awareness and momentum from Helimix's over 39,000 4.5 star reviews on Amazon. This quick turn launch represents a compelling opportunity to drive organic growth going into 2026 and deliver a margin-accretive product line with a strong ROI. Importantly, this further hires in new and existing markets. The breadth of innovation across our Drinkware portfolio is demonstrating clear traction and setting us up for continued success in long-term category leadership.

In Coolers & Equipment, our double-digit growth for the quarter underscores the broad demand we're seeing across the portfolio. On the innovation front, our day trip soft coolers saw significant demand. Additionally, we have several highly anticipated day trip line expansions planned in the coming months to address an even wider market opportunity.

In bags and packs, we continue to see strength across new and legacy products with notable performance in backpacks, totes and doubles. Following strong demand for Camino totes, which sold out across channels a number of times, we've worked to replenish inventory through limited rereleases and are partnering with our retailers to capture some of the anticipated holiday demand and sustained momentum of this iconic product.

In hard coolers, our Roadie and Tundra families continue to extend reach even as we lap the significant debut of the Roadie 15 and Roadie 32 in the prior year. The recent additions of customization capabilities on a range of our coolers unlock significant opportunities, particularly among our existing partnerships and sports relationships. Last month, we launched an expansion of our storage and protective case platform with the GoBox One, which comes at a giftable price point right in time for the holiday shopping season. Expect to see much broader expansion here in 2026.

I'm also very excited about the build-out of our global innovation capabilities. Our Thailand Innovation Center focused on hard goods is now fully operational and already driving impact, giving us the capability to significantly increase our speed and capacity for product development. In addition, pleased to announce a new development and innovation office in Vietnam to open in early 2026, dedicated to the design and development of bags and soft cooler bags. This will complement our existing product talent and capabilities in Austin, Denver, Bosman and Thailand. Together, these innovation centers will enable a 24/7 global cycle across both current and future products and provide us with the ability to respond with even greater agility to market opportunities, fueling long-term growth and competitive advantage. It's clear that our product expansion and innovation are working. And as we look forward with our pipeline stronger than ever and significant white space ahead, we are well positioned to execute.

Our second strategic growth priority focuses on broadening our brand and our global customer base through brand awareness community engagement and a unique omnichannel strategy that enables us to reach consumers where and how they shop. We are amplifying our brand marketing as we approach Yeti's 20th anniversary. Starting later this month, we will release our largest ever U.S. brand campaign around major sporting events in the run-up to peak holiday shopping. Partnering with the incredible talent at Widening Kennedy, we're on the front end of shaping the next decade of our brand. This brand campaign will span linear connected and digital media.

Additionally, to amplify our reach, particularly on social platforms like TikTok, we've added a new media partner to drive this effort. These initiatives mark a significant step towards elevating YETI's always-on brand presence and impact, connecting to our powerful foundational audience while broadening our reach. In terms of engagement at the local level, in Q3, YETI activated at over 80 events worldwide, deepening connections with consumers across the ions and communities. To that end, our sports presence has never been higher. Following the launch of our strategic partnership with Fanatics, we are now licensed with the NBA, rounding out Major League relationships across NFL, NHL, MLS and MLB.

We're also proud to have recently signed on as an exclusive partner including courtside presence for League One volleyball, a fast-growing women's professional valuable League and parent to roughly 2,000 youth and junior teams and 24,000 players. Internationally, YETI's footprint is expanding through continued partnerships with top clubs and teams, including Tottenham Hotspur, now featuring YETI on the front of the women's team training kit, the New Zealand All Blacks, Oracle Red Bell racing and more to come. Our limited edition team product launches and signature cut programs continue to power these partnerships into consumers' hands.

At the collegiate level, YETI has outfitted over 50 NCAA schools and 80-plus Division 1 teams covering almost 4,000 athletes, including a strong combination of both women's and men's sports. As we continue to grow our sport relationships, we see further exciting potential to expand our channels to market from youth up to professional. These initiatives highlight YETI's accelerating momentum in sports from grassroots to the global stage supporting athletes with high-performance products and driving brand growth across new audiences and markets. As we execute our brand-building strategy, YETI is unlocking significant opportunities for global growth, leveraging strategic partnerships and a refreshed media approach to expand our reach and our influence.

Shifting to our channel performance. The continued expansion of our product portfolio, combined with our diversified presence across channels, is a key part of our strategy to broaden our audience. Our wholesale channel demonstrated very strong momentum despite a continuation of more cost is ordering and tighter inventory management from our retail partners, particularly in the U.S.

Sell-through trends remain strong, reflecting healthy consumer demand throughout the quarter. As we enter year-end, we are well positioned from a channel inventory perspective and feel great about our setup heading into 2026. Last month, we started a new wholesale partnership with Nordstrom, where YETI is being featured in their holiday gift activation across 91 doors and online and permanent placement in 70 Nordstrom Home doors. This new retail partnership underscores our focus on adding complementary distribution channels to support our diverse product portfolio.

In our direct-to-consumer channels, we continue to leverage our omnichannel approach to meet evolving shopping behaviors with speed and agility. YETI's Amazon Marketplace continues to see strong performance in our corporate sales business once again exceeded expectations, supported by expanded customization capabilities across hard coolers and select bags as well as our growing partnerships in sports and hospitality.

Notably, our collaboration with Fanatics, a leading global digital sports platform is off to an exceptional start. This partnership significantly expands YETI'S presence in the sports licensing market and is already driving strong engagement across fan communities. We're incredibly excited about the momentum we're seeing and the opportunities ahead as we build on this performance and further accelerate growth across our consumer and commercial channels.

On yeti.com, traffic and average order value grew in Q3 with strong engagement around new product launches. Conversion rates remained pressured in the quarter, impacting our overall performance and reflecting a greater prevalence of deal shopping by consumers. In response, we focused on effective deployment of performance marketing spend, prioritize higher-quality traffic and launched targeted initiatives to improve conversion efficiency. In the near term, we're optimistic about our upcoming Dear garage event, which is expected to further elevate customer engagement and drive traffic and purchase intent. These efforts are laying a strong foundation for yeti.com in 2026.

In retail, we remain focused on maximizing the performance of our existing stores. During the quarter, we launched localized branded apparel and accessories in 16 stores to add a unique impulse purchase moment. We also introduced immersive walk-throughs on yeti.com to showcase the YETI retail experience. With more initiatives planned for Q4, we're building upon our retail foundation to support the next phase of growth and continued impact on the rest of our channels to market.

Our third key growth driver is expanding our global presence. The YETI brand continues to build as we execute our proven go-to-market strategy across our international markets. I recently spent time in the U.K. and Europe with a number of iconic global brand partners. I walked away from those meetings incredibly energized about the mutual brand respect, passion and creativity for working together. Mike will talk further about the performance in the quarter and the setup for Q4 but suffice it to say, we're on the front of the global wave.

Europe continues to show outstanding growth led by excellent performance in the U.K. and continued traction across key European markets. In addition to the recent partner meetings in the U.K. and Europe, I also joined partners across Asia earlier this year. The energy and momentum is undeniable. Combined, these markets echo the early surge we saw during YETI's rapid U.S. expansion and again, in Canada and Australia. What's unfolding is not just market growth. It's a product-led brand endorsed movement. We're confident in the trajectory ahead and energized by the opportunity it represents.

In Japan, our presence continues to scale quickly with over 270 doors open to date and 400-plus stores expected by year-end. Looking ahead with our core leadership team in place, our priority is consistent execution of our go-to-market strategy, leveraging the strong fit between YETI's premium positioning and the Japanese consumers' appreciation for quality. We see the broader Asia region as a key long-term driver of international growth potential.

This year, complementing our launch directly in Japan. We added distribution in Thailand. In addition, we have signed distributor partners and are planning launches in 3 Asian markets next year, Malaysia, Singapore and the Philippines. We are also making progress against our plans and potential partnerships in Korea, China, Indonesia, Taiwan and Hong Kong. In Canada, consumer demand for YETI products continues to be robust even as our wholesale partners remain cautious during the third quarter.

Seasonal colorways and innovation across categories are resonating in Canada highlighting the relevance of our diverse product offering and the impact of our localized brand strategy. In Australia, we delivered growth across all channels in core categories during the quarter, and we anticipate further acceleration in Q4. Brand enthusiasm remains strong, positioning us for sustained momentum through the end of the year and into 2026.

Going into 2026 and beyond, we continue to see attractive opportunities for further global expansion across the Middle East and South America. In terms of supply chain transformation, our diversification plan is well on track with key factory partners now live across multiple geographies. These partners are consistently meeting our high standards for quality and cost. We continue to expect that by year-end on a go-forward basis, less than 5% of our total cost of goods sold will be exposed to U.S. tariffs on goods sourced from China.

And importantly, our multi-country sourcing strategy will be fully operational. As we look ahead to 2026, we're extremely well positioned with a more resilient flexible and diversified supply base that strengthens our ability to scale globally while mitigating geopolitical and operational risks. As we navigate a dynamic macro, our fortress balance sheet and very robust free cash flow generation continue to underpin strategic investments in growth and innovation.

At the same time, it enables us to execute our growth-oriented capital allocation priorities in addition to creating value through share buybacks. With $173 million in share repurchases year-to-date, we are upsizing our 2025 plan from $200 million now targeting $300 million by year-end, bringing our total repurchase to $500 million across 2024 and 2025, representing approximately 14% of our shares outstanding.

Alongside our growth and disciplined capital allocation, we're making investments and focusing resources on potentially transformative technologies, including artificial intelligence to unlock new growth opportunities, enhance consumer engagement and drive efficiency. We're early on the journey but committed to it. Our AI strategy spans high-impact applications from automated custom image moderation reducing the necessity for manual processes, customer support, sites, search advanced marketing analytics and back-office automation tests.

We are also leveraging AI to amplify brand visibility in the evolving search landscape. Recent initiatives include AI-enabled product customization including the launch of a Gen AI photo to line art feature to elevate consumer creativity and the launch of Ranger, a conversational shopping assistant designed to boost conversion on yeti.com.

Our efforts around AI-driven content optimization helps secure YETI the #1 share of voice across major AI discovery platforms over the past quarter, and we've modernized our marketing measurement with AI-powered [indiscernible] modeling. These initiatives not only differentiate YETI, but also deepen consumer insights enable data-driven decisions and create the potential to strengthen long-term margins.

As it relates to our full year 2025 outlook, we remain confident in our disciplined execution against a well-established strategy, and we believe we are well positioned to continue our momentum into year-end. I'm incredibly encouraged by the global feedback we're receiving underscoring growing passion for the YETI brand, strong enthusiasm for our products in anticipation for the innovation ahead.

As mentioned last quarter, we plan to hold our Investor Day in the first half of next year. Today, we're excited to announce that we'll be hosting the event in Austin, Texas to fully showcase YETI and where we are going. We will be providing additional details on the event in the near future.

Looking ahead, we're entering an incredibly exciting chapter for YETI, driven by immense passion for our brand, the amazing quality and innovation in our products and the scalable nature of the business model. We have strong foundation to build off as we advance the business towards the global growth potential for YETI with a clear focus on execution against our strategic priorities.

I'll finish by thanking our team and partners for their commitment to building this brand the right way. setting us up for the incredible potential in front of us. With that, I'll now turn the call over to Mike.

Thanks, Matt, and good morning, everyone. I appreciate you all joining us today. I'll start by reviewing our third quarter 2025 performance, then share our outlook for the full year. Following that, we look forward to taking your questions. As a reminder, all results presented on today's call will be on a non-GAAP basis to better focus on the operating performance of the business during the quarter.

Let's begin with the top line. In the third quarter, we delivered sales growth of 2%, reaching $487.8 million, which was above our expectations. This performance was driven by double-digit growth in both our Coolers & Equipment category and in our international business. In addition, we are incredibly encouraged by the underlying momentum we are seeing across the business. Consumer demand is strong, and our recent innovation is resonating even as caution persists among consumers and wholesale partners.

Looking at our product categories, Drinkware sales declined 4% to $263.8 million, which was in line with our expectations. The U.S. drinkware market remains challenged during Q3 with similar levels of promotional activity as compared to the prior quarter. However, there was real strength within key pieces of our broad and diversified Drinkware portfolio. And outside the U.S., Drinkware continued its growth trend. As we said last quarter, we believe that our global drink wear business will return to growth in Q4, driven by innovation, international growth and as we lap the more challenging market dynamics that began in the fourth quarter of last year.

Coolers & Equipment had a strong quarter globally with sales up 12% to $215.4 million. Bags had a fantastic quarter across the full portfolio of products, and we saw strong growth from soft coolers. Both categories benefited from recent innovation, and we believe that there is tremendous opportunity for growth in each category going forward. Diving into performance by channel. Direct-to-consumer sales grew 3% to $288.7 million. Our Amazon Marketplace continued its strong performance even in the face of a softer Prime Day event as compared to last year, underscoring consistently strong consumer demand for the YETI brand within this channel.

Corporate sales continued to deliver soft solid growth, and we are excited about the growing number of strategic partnerships that we are developing around the world. When combined with an expanding portfolio of customization capabilities, we believe this will enable us to capture demand while at the same time growing our brand on a global basis. As for e-commerce, while we were pleased with the performance of our international sites in the U.S., yeti.com saw a continuation of trends from Q2.

Traffic and average order values grew year-over-year but conversion continued to be a challenge, which we believe is a sign of a discerning consumer. In the wholesale channel, sales increased 1% to $199 million in the third quarter. Our international wholesale business delivered good growth, both on a sell-in and sell-through basis. In the U.S. wholesale channel, strong C&E performance was offset by a decline in the drink work category, stemming from a continuation of trends seen in the second quarter, elevated promotional intensity, coupled with conservative ordering from some of our wholesale partners but we believe the underlying trends and sell-through are incredibly important.

We observed double-digit sell-through growth in the U.S. for both C&E and Drinkware. This accelerated the trend we saw in the prior quarter where sell-through growth is exceeding selling growth and has resulted in a reduction in our channel inventory levels versus the prior year. We believe this positions us well for the future, especially when combined with the exciting new U.S. distribution opportunities that we have announced this year, including Fanatics and Nordstrom.

Moving to our international business. Sales outside the U.S. grew 14% to $100.4 million, representing approximately 21% of total sales in the third quarter. This reflects growth in every region, Europe, Australia, New Zealand and Canada as well as very early contribution from our launch of Japan. Europe was the real growth highlight in Q3, continuing the trends that we have seen this year. We have tremendous momentum in the U.K., where we continue to benefit from growing brand awareness, strong consumer engagement and increasing interest from wholesale partners.

Also, we are pleased with the progress we are making in Japan. This is a foundational year for us in Japan, hiring the team, establishing relationships and building the infrastructure that we needed to capitalize on what we believe is a tremendous opportunity.

Now moving down the P&L. Adjusted gross profit decreased 2% to $272.5 million or 55.9% of adjusted sales compared to 58.2% of adjusted sales in the third quarter of last year. This 230 basis point year-over-year decline was driven by a 320 basis point unfavorable impact from higher tariff costs. In addition, a lower mix of Drinkware sales in the quarter had an 80 basis point unfavorable impact on gross margin. These were partially offset by a 60 basis point benefit from continued product cost savings a 50 basis point benefit from selective price increases executed early this year and a 60 basis point benefit from a number of other smaller factors.

Adjusted SG&A expenses in the third quarter increased 3% to $205.9 million or 42.2% of sales compared to 41.7% in the prior year period. We continue to make strategic investments to drive future growth in key areas such as product development and technology, while at the same time, taking a disciplined approach to managing our operating expenses. On an adjusted basis, operating income decreased 16% to $66.6 million or 13.7% of sales and net income decreased 18% to $49.6 million or 10.2% of sales. Adjusted net income per share decreased 14% to $0.61 versus $0.71 in the prior year period.

Our EPS this quarter includes a $0.14 net impact from incremental costs associated with tariffs announced in 2025.

Turning to our balance sheet. We ended the quarter with $164.5 million in cash as compared to $280.5 million in the prior year quarter. During the third quarter, we repurchased 4.3 million shares of YETI's common stock on the open market for $150 million, bringing the year-to-date total to 5 million shares for $173 million. Total debt, excluding finance leases and unamortized deferred financing fees was $74.9 million compared to $79.1 million at the end of last year's third quarter.

From a total liquidity standpoint, we ended Q3 in a substantial net cash position and with our $300 million revolving credit facility fully available. Inventory decreased 12% year-over-year to $324 million, reflecting strategic management of our inventory purchases and continued supply constraints related to our supply chain transformation.

Now turning to our updated fiscal 2025 outlook. We now expect full year sales to increase between 1% and 2% versus fiscal 2024 adjusted net sales and as compared to our prior outlook of flat to up 2%. This updated guidance continues to include an approximately 300 basis point unfavorable impact related to our supply chain diversification efforts and subsequent inventory supply disruptions, which is consistent with our previous outlook.

From a product perspective, we expect C&E to be up mid-single digits and drinkware to be down slightly for the full year fiscal 2025. As I mentioned earlier, for the fourth quarter, we continue to expect positive growth in Drinkware, reflecting the impact of recent innovation, growth outside the United States and the lapping of market dynamics that we began to see in Q4 in 2024. From a channel standpoint, we expect D2C growth to be slightly above wholesale growth in fiscal 2025.

Geographically, we are maintaining our outlook for our international business as we continue to expect growth of between 15% and 20% in fiscal 2025. This implies an acceleration in international growth in Q4, reflecting the timing of order patterns that we mentioned last quarter and the continued strong consumer demand that we have seen throughout this year.

In the U.S., we anticipate a low single-digit decline for the year, largely due to the dynamics within the Drinkware category that we have discussed. That said, we remain encouraged by the resilience of our U.S. Drinkware business, and we anticipate improving growth trends in the fourth quarter.

We continue to expect gross margins for the year to be between 56.5% and 57%, as was the case last quarter, this reflects an approximately $40 million or 220 basis point net impact from tariffs. Trade policy discussions are ongoing, and the ultimate outcome regarding tariff rates remains uncertain. In our guidance, we are assuming that the latest tariff rates as announced, remain through the end of the year. But given the late timing of the year and our successful efforts to transition our supply chain, the recent reduction in the tariff rate on goods imported from China will not have a material impact on our gross margins in 2025.

We continue to expect operating expense growth of between 2% and 4% versus the prior year. This reflects the impact of ongoing investment in our growth initiatives, partially offset by continued cost optimization. We continue to expect operating income for the full year to be between 14% and 14.5% of adjusted sales reflecting a net unfavorable impact of approximately 220 basis points from higher tariff costs versus the prior year.

Below the operating line, we continue to expect an effective tax rate of approximately 25.5%. We now expect full year 2025 diluted shares outstanding of approximately $81.5 million versus our previous outlook of $82 million. This reflects the impact of our increased share repurchase target through fiscal year-end to $300 million versus $200 million in our prior outlook.

Reflecting the narrowing of our sales guidance and the impact of our increased share repurchase target. We now expect adjusted earnings per diluted share of between $2.38 and $2.49, including an approximately $0.40 net unfavorable impact from higher tariff costs versus the prior year. Consistent with our previous outlook, our capital expenditures for the year are projected to be approximately $50 million. Our capital spending remains focused on advancing our technology, launching innovative products and strengthening our supply chain.

We now expect free cash flow of approximately $200 million in 2025 compared to the prior outlook of $150 million to $200 million. As it relates to year-end inventory, we continue to expect a decline year-over-year. We are proud of the results we delivered and the growing momentum we created in the third quarter, especially against the backdrop of a persistently dynamic macroeconomic environment and heightened overall consumer caution. This performance reflects our unwavering commitment to executing on our strategic growth priorities.

At the same time, we continue to focus on fortifying our supply chain, exercising cost discipline and capital management, and driving operational excellence. These efforts are designed to support sustainable, long-term global growth and deliver value to our shareholders.

Now I will turn the call over to the operator to take your questions.

[Operator Instructions] Our first question comes from Randy Konik with Jefferies.

I guess, Matt, you led off the call this in and you said something to the effect of, we see this business long term having a growth algo potential of high single digits to low double digits, I believe. Maybe kind of think about -- not -- I don't necessarily need the timing of that but maybe kind of think about or give us kind of the building blocks you think about to kind of get back towards that growth all go in time? How do you kind of put all those pieces together? Obviously, on the product side, and the GEO side. Just give us a little more framing up of how you think about that. That would be helpful.

Thanks, Randy. I appreciate the question. I think as people who have followed along with the story since our IPO, everything in this business is built on product and making great product. And I look I look at where we were a year ago, growing 9% where we've been since the IPO, low double-digit growth CAGR. I look at the setup that we have across innovation, both the strength of our existing portfolio I think you started to hear that on the call today, the things that we saw in the third quarter, the buildup for the rest of the year in the U.S., in particular, the expansion opportunity, the drive we've seen in C&E, which is really driven by both legacy products and new expansions and the things that we're seeing that are really exciting in the bags.

The second big 1 is the brand reach. And I think this brand continues to grow globally. We reach new audiences. We have new interactions with consumers we create more opportunities to bring YETI products into different ports or parts of their life.

And then the third one is, as I said on the call, I think we're -- from a global perspective, we're on the front end of the wave. And so when you step back and think about what the growth algorithm going forward for YETI is it's going to be built on innovation, both the performance of the products we have today and the expansion is going to be built on the continued brand relevance and deep connection and the reach that we have with the brand.

And the third one is the global opportunity we have in front of us. And I think that's what we started to see in Q3. I think we've indicated the things that we'll see in Q4, and it's what we're excited about as we go into 2026 and be beyond.

That's great. And then I guess my follow-up on the wholesale side, can you just kind of elaborate a little bit more? It sounds like the sell-through is very strong sell-ins more subdued. I'm talking about the United States market and the wholesale. Should we expect that the sell-in start to improve as inventories get worked down, improvement to 2026. And on the direct-to-consumer side, you talked about, I believe, a conversion down but traffic and AOV eating, I believe up. as you launch more things like the silo jug in my 8 [indiscernible] because I bought it for him, he loves it, as you kind of keep pushing out more and more newness and it gets more and more attention to it, do you think that these traffic levels and continue to rise and convert to 2023? I just want to get your pro [indiscernible]?

Thank you, Rick. It is an incredible product that we're really excited about. And I think it exemplifies the strategy we have. And I think it's why we've had the results and why we continue to be bullish on what's happening in Drinkware particularly in the U.S. And we're building on that incredible foundation we have and really think that the forward look and the opportunity in that category is great.

I think when you talk about the U.S. wholesale, the sell-in, sell-through dynamic, I think we always start with looking at sell-through, where is the consumer demand in that important to us that importance of that moment to sell to and interact with consumers see their demand for YETI is outstanding, and we're really used about what we see there. The sell-in dynamic is sensitive to what's happening with from an inventory position. I think it's disproportionately a Drinkware story. And we said this for the last quarters. We expected the Drinkware category to settle out.

We work very closely with our wholesale partners on what their inventory is. And we've seen, we believe, categorical destocking happening around drinkware. The grades is we're seeing the strength on the consumer demand. We're seeing the strength from the innovation. We're seeing the strength of the opportunity to go forward as we talk about the portfolio that we have coming in Drinkware in particular.

As it relates to D2C, we always want to look for strength in that traffic and AOV are both really positive signs, I think, in our dot-com. The conversion rate is really something that we're focused on, how do we drive more efficiency, more productivity, higher conversion of the people that are showing up on our dot-com site. But I think what the results show is it exemplifies the power of our omnichannel strategy. And we talk a lot about, we want to be where consumers are shopping. We're thrilled with the performance we've seen on the Amazon marketplace. We love to see our wholesale partners showing really strong sell-through growth and consumer demand, and we continue to invest behind making yeti.com a flagship place for discovery consideration and ultimately purchase, which should continue to improve the conversion.

Our next question today comes from Brooke Roach, Goldman Sachs. .

Mike, I was hoping you could help us understand the scaling opportunity of some of the new sport focused launches that you are putting into the marketplace in the back half of this year, whether that is the fanatics, the sport jug and some of the blender boring into the marketplace, kind of contribution do you expect from that as you go over the course of the year? And will that be the return to growth? What's the forecast for your core business of legacy products?

Thanks, Brooke. I'll the front end of that. And Mike set out on the topic. What I would say largely is we feel really good as we look at our Drinkware portfolio and the innovation been driving and the diversification. We've had these conversations over quarters as that category had a lot of attention around it. And we said our strategy is diversified, and build a strong foundation in base and then grow off of it. And I think that when we look across the portfolio we have today, it isn't about the things we've done coming in bottles and jugs.

We're really excited about the tumblers and cups. We just had a release yesterday, of a launch format straw and you can see what the social response to that was an elite proof, large handled tublet. We're really excited about that travel mug but when we look to sport and where we're going, we believe we can play from the sideline to the home, to the outdoors, to the job site. And I think that the jug is an incredible versus all YETI product in that way.

I think where the sports come into play is that connection of Fantom and connecting brands, the channels to market that Fanatics offers the licensing partnerships that go through existing wholesale partners that we have and provide a direct-to-consumer opportunity, I think are really exciting. You'll see us continue to innovate in that category because we believe that ports on top of our outdoor legacy on top of our historical fishing legacy is an incredible way of expanding our audience through innovation, through connection to consumers. And so we're really excited about where this is going.

It's Mike. So in terms of the forecast, I mean, I'd say it's all part of what we talked about as why we believe Drinkware will return to growth in Q4. I mean, we said it was driven by innovation. This is obviously a piece of that. The sports shut we talked about silo talked about, the shaker bottle launching this quarter. It will be late in the quarter, not a huge amount, but it's all just part of that overall innovation story.

And then the second thing we talked about is why we believe that Drinkware can return to growth in Q4 is just the international growth story and the opportunities that we see to continue to grow Drinkware as we expand internationally. So it's all part of the overall story.

Our next question today comes from Peter Benedict, Baird.

I guess I'll ask about the promotional environment as you think about the double-digit sell-through U.S. wholesale for Drinkware, how much of promotion is driving that? And -- and then how do we square that with kind of the lower conversion that's happening on yeti.com, is there just a higher promotional cadence in wholesale and not as much on your site.

Just trying to understand that and understand how you think about the promotional cadence in the holiday and going forward and how much you do and how much your partner to do.

Peter, thanks for the question. I would say a couple of things. We've been talking for a number of quarters that not only did we expect Drinkware in the U.S., in particular, to be promotional in nature but it's been consistent, and we've seen that. And that's across brands, go out and do market surveys. You'll see that out there I think for us, we've had a really nice combination of sell-through driven by the innovation that we've launched. And when we look at, we talked about our Wetlands came, when we look at this new launch of the silo jug, we've got this travel straw that just announced yesterday. We go back over the quarters and look at the innovation that we brought to market in color material finish in form factors, we really believe that innovation expansion, brand relevance is the thing that drives YETI not a -- it really drives it in an environment that is highly promotional and continues to be that way.

From our promotional posture, our promotions are consistent with things that we've done in the past. As we transition out of colors transition out of styles. And we'll continue to do that. As we get bigger and the portfolio gets bigger, there may be incremental ones we do just based on the numbers. But I think largely, what we're focused on is how do we drive the premium nature of YETI, the desire for the innovation, the looking to YETI for what's new. And I think that's what our team has done an extraordinary job this year amidst an incredibly complex supply chain transition, of which I'm really proud of the work we've done and the setup that we have both in innovation and the posture of our global supply base for 2026.

I think as it gets to yeti.com and the conversion, I really think that there's -- we're continuing to watch where consumers want to shop at some changing and shifting behaviors. I think that ties in a little bit to some of our comments on the call about how we're looking at AI and what that does to search and how we play into it. And so it's an area we're really focused on but the overall display is the power of having our diverse omnichannel to market from wholesale through our diverse D2C all the way to our dot-com and our retail stores. I think that's -- we want to be where yet can win.

Our next question today comes from Phillip Blee from William Blair.

So I just want to talk a little bit about the fourth quarter. The implied guide assumes a bit of a sales acceleration, can you maybe just provide a bit more color on your confidence there. A lot of retailers are calling out consumer demand that's been increasingly choppy. But are you seeing any of that? Or have you already seen some of that improvement in sell-in or sell-through quarter-to-date? And then just a clarification question on Drinkware the category should inflect positive in the fourth quarter but do you see the potential for the U.S. market to return to growth? Or is it maybe more of an international?

Thanks for the question. So I'd say both your questions are related. So as we look at Q4 and where we sit today, I mean, we've been -- all year long, we talked about strength in C&E and we saw that in Q3. We had a really good back quarter, really strong soft coolers quarter. in an overall really strong C&E quarter in both the U.S. and international. In Drinkware, really strong outside the U.S. in Q3 and then in the U.S., it played out about like we expected. But as we've consistently said, when we look at the innovation we have coming, when we look at the growth outside the U.S. that we think can continue and we start to comp some of those that when the market dynamics really started in Q4 of last year. We expect to see a stabilization but the factors that sort of combined to say that, hey, we believe we can get Drinkware back to growth in Q4.

We believe we can continue the growth we've seen in C&E. And that should lead to a better outcome in the U.S. market. when you run the math, it kind of says the U.S. based on our guide, will definitely improve as we look to -- from Q3 to Q4. And I think it's all those factors that we've talked about. You mentioned consumer demand being choppy. I mean, really, like Matt mentioned, consumer demand was at a sell-through level was strong in Q3 and we feel good about that as we head into Q4.

On the DTC side, I think the choppiness comes from across channels. So Amazon and corporate sales have been strong U.S. e-commerce has been a little more challenged. But overall, we feel good about where we are as we head into Q4.

[Operator Instructions] Our next question comes from Peter Keith, Piper Sandler.

This is Alexia Morgan on for Pierre. I was wanting to follow up on the previous question. So international in Q4 implies a pretty big step up just to get to the 15% to 20% guidance for the year. I was wondering what gives you confidence there on that step-up? And then also what level of international growth is sustainable to support your provided long-term algo for high single to low double-digit sales growth.

Yes. Alexia, thanks for the question. So I'd say you are correct. So the guide would imply a step-up from Q3 to Q4. But I'd say a couple of things. One, the step-up is in and around the level that -- of growth that we have seen over the last quarters or so, last year and in the first quarter of this year. So it's not like we're not getting back to levels where we've been before. number one. Number two, all your lung, we talked about some timing differences related to international wholesale that growth is going to move around a bit. You saw the return of us back to double-digit growth in Q3, and we expect that momentum to continue as we go into Q4.

But also, just like in the U.S., we have some consumer demand reporting that gives -- that has remained strong outside the U.S. And so when we combine all those factors together, it gave us confidence that we can get back to the levels that we would need in Q4 in order to hold our guide for the year.

In terms of long-term international, I mean, obviously not giving any guidance beyond 2025 this year or this quarter -- but what I'd say is we believe when we look at the opportunities that we have in Europe, that we have in Asia, both in Japan and beyond that based on some of the comments that Matt made this morning, we still believe we have a significant opportunity in front of us and the word we've used is we believe we're on the front of the wave in terms of what we think the opportunity is outside the U.S.

Our next question today comes from Joe Altobello, Raymond Jame.

I want to quickly touch on Paris. You have a net tariff impact this year of about $0.40 per share. I realize you're not giving any kind of guidance for next year, but just trying to get an idea of what that might look like going forward?

Yes. Thanks for the question. So I mean, you're right. We're not giving any kind of guidance beyond 2025 on this call. There are also a lot of moving pieces. So on 1 hand, you've got the rate on imports into the U.S. from China coming down recently, won't have a material impact on 2025 given the timing, like we've said, for most of this year, China has been at 30%. And by the end of this year, we will largely be out of China for goods imported into the U.S. we will see an annualization of the full year impact of tariffs in other countries outside of China.

I'd say the other thing is given how we've diversified our supply chain. We now have the opportunity to look at where we produce and optimize our sourcing based on where tariff rates sits. I mean, there are some countries that we in which we source that do not currently pay a tariff. So I think next, we'll look for ways to optimize our cost, continue to partner with our suppliers, and then lastly, we'll also look at price. So there are a lot of pieces moving around, and there's work for us to go do that we're going to continue to go do.

So not giving guidance specifically beyond this year other than to say it's something that we're watching closely and that we will -- it's a -- it remains a significant priority for us, and we'll have -- and we'll continue to work at it.

That's helpful. And just kind of quickly looking at this quarter, were U.S. sales up if you exclude Drinkware?

Well, I think -- yes, I mean, we didn't give the specific number, but we talked about T&E strength in the U.S. and international. So I think it's fair to say that U.S. sales were up, if you exclude Drinkware, correct?

The only thing I would add to that is, if you really think about and you'll see it in our revised investor deck a more blown out view of our product portfolio. But really, the drag in our Drinkware business is pretty concentrated around that trend-driven last couple of years style. And the overall strength in our drink business is what gives us confidence in the expansionary strategy, the innovation, the growth we're driving, the relevance to consumers. So it's -- I think -- and that's why we feel good about the forward look.

Our next question today comes from Molly Baum, Morgan Stanley.

I want to follow up on your thoughts around 4Q, specifically the holiday season. I know you mentioned that you had a softer Prime Day versus last year. So can you maybe give a little bit more detail on what drove this? And if that's -- if there's any read through there on what we might expect for some of these key holiday selling periods.

Molly. So Yes. We mentioned overall strength on Amazon despite a softer July Prime Day versus the prior year. And we saw that we weren't alone and sort of seeing that. So I think the holiday time period is different. It's not 1 event. It's over a longer period of time which I think placed our advantage a little bit because that's what we saw in Q3. Was that just sort of sustained demand -- strong consumer demand on Amazon. But it's just 1 piece of our overall growth story in Q4.

Obviously, our dot-com business and what we have planned around gear garage is always an important piece of our Q4 business and we feel good about where things stand and what we have planned. We will -- obviously, we believe, given the overall strength on Amazon, we're set up for a good holiday season. And then as we're just talking the U.S., obviously. I mean we feel really good about where our international business is toleration that we have planned in Q4.

So I don't think you can take a direct read through from Prime Day and apply it to the holiday season because there's just too many other factors at play.

Thank you. Our next call -- sorry, our next question today comes from Noah Zatzkin form KeyBanc Capital Markets. .

I guess just on kind of the M&A front. I think there was kind of a thought some time ago that maybe tuck-ins would kind of play a role in how you're thinking about the long-term algo. So how do kind of tuck-in acquisitions factor into the high single-digit to low double-digit long-term growth rate? And then just in general, kind of how are you thinking about M&A more near term?

Thanks, Noah. I appreciate the question. A couple of things I would say. We obviously talked a lot on the call and you have seen over the last couple of years, our capital allocation priorities. And disproportionately, it's been a really strong sign in the buybacks that we've completed. And as we communicated on the call, with the upsized target for the year, it would be $500 million over the last 2 years in buybacks. And I think that shows the conviction we have in what we're doing at YETI and what's in front of us.

As it relates to acquisitions in that, what I would call, very targeted deployment of capital around technologies, designs, IP is really all innovation-focused. And so if you go back and look at the types of things that we've done, it's not tuck-in in the traditional sense of the tuck-in of a business or a brand. It's really about access to capabilities so that we can accelerate the innovation pipeline. We did it with the expansion we've had in bags underneath the YETI brand, and you saw that starting earlier this year, and we're excited about what's to come in 2016 and beyond.

In the cast iron, we had an opportunity to get a small niche design, make it a Yeti design, enhance it, bring it to market and really set a marker out there in the market for what we can do in this expanding Cookware and culinary world. And then the shaker bottle, similarly, we got a chance to get something that was unique in the market from a design perspective enhance the product and bring it back to the market, which is what we communicated will happen in Q4. And so those opportunities, I look at them as adjuncts to the investment we make in the people, technologies, processes we have inside the business.

And so we'll continue to look for those, which sort of jump the curve on getting product to market, jump the curve on technology, expand sort of our open innovation, our Ace Hardware thought process. But suffice it to say that our forward look on this business is driving growth underneath the YETI brand that we think complements our channels to market, complements our brand extension strategy. and really addresses consumer needs and consumer opportunities we see.

Our next question today comes from John Kernan, TD Colin.

This is Chris Zuber on for John. Just on the international sort of bigger picture, the double-digit growth you've demonstrated through much of this year and the international mix of sales now around roughly 20%, how are you thinking about the margin profile of this business relative to the U.S. or the company average overall? And then just secondly, on the product launches. You've talked about the opening of the Thailand Innovation Center, complementing the Austin Center. Now you're adding Vietnam, you're on track to exceed roughly 30 new product launches this year. Is that how we -- and how are you thinking about the run rate of launches going forward?

Appreciate the question. I'll take the first question and then we'll pass it to Matt for the innovation question. So international margins, so what we said is that there's some channel and product mix differences across the different regions. But from a gross margin perspective, when you normalize for that, our gross margins are pretty similar to the U.S., outside the U.S. versus the U.S. And so from an operating margin standpoint, I really think it kind of varies by where the region is and it's maturity. So regions where we've been in for a while, Canada, Australia have really strong profitability places like Europe and Asia, where we're building, where we're growing brand awareness, we're investing. Obviously, it's a little different.

So I think you'll start to see as Europe continues to grow and become a more mature piece of our business like Australia and Canada, then I think you'll see that start to -- Europe starts to sort of progress toward where Australia and Canada are but then you've got our efforts in Asia where we're going to be investing as well. So that's kind of how I would think about it. There are a lot of moving parts in there but it's really -- from a gross margin perspective at a channel level, they're very similar.

What I would add is as we think about the cadence and pace of innovation, it's really less about this year versus 35% next year versus 25 or whatever the numbers may be last year. It's really about opportunity we see product market fit, opportunity to merchandise in our existing channels to market opportunity to expand our channels to market, intercept the consumer at a new buying occasion. But what I think Thailand, Vietnam, Bosman, Denver, Austin offer us is immense capabilities to respond to market opportunities we see to bring innovative products to market, to control our innovation to partner with the best contract manufacturers around the world to bring it to the consumer and our partners in the most efficient and effective manner.

And so I think everything from ideation to the innovation, to the development to ultimately the sourcing and execution. We're building capabilities to take advantage of the global opportunity that we see. And that includes the continued penetration growth deepening of our relationships in the U.S., which is an incredibly important market to us and the expansionary opportunities that the rest of the world offers.

Our next question today comes from Anna Glaessgen from B. Riley Securities.

SP27401604 I had kind of a bigger picture question. Thinking through the long-term algo kind of why reiterate that high single digit to low double-digit growth now. And -- to what extent is -- or thinking through balancing a few investments required to drive the innovation required to get to that growth versus maybe seeing some more OpEx leverage in the out year 4 years beyond.

Anna, thanks for the question. I'm going to do my best. I think I got most of that but let me kind of take a crack at it and if you have a quick follow-up, we'll address it. The timing is when you really think about we're building this brick by brick. We've always been product focused. We've always been brand expansionary focused. We've always talked about the international opportunity.

I think what we have seen build over the last number of quarters and really kind of came together in Q3 is the kind of foundational opportunity we continue to see in the U.S., the global opportunity we're seeing outside of the U.S. the proof points of the reach the brand is getting in this next evolution in connection as we talked a lot about sport.

In the innovation, both the investment we've made, which we think is a very scalable investment that has a high return but the strength of our existing portfolio to continue to drive us forward and the impact of the expansionary growth. And so it was a great time for us to start that build towards this moment, and then we'll go into our 2026 guide in the Q4 call when we're back together and it will go into an Investor Day. And all along, what I expect from YETI is what we have seen since we went public in 2018, which is we just continue to execute. We continue to build this brand the right way. We continue to innovate and lead the market, and we continue to find new market opportunities around the world.

And I think that's as simple as the rationale is, and we think the algorithm builds into that.

Thank you. There are no further questions at this time. I will now turn the call over to CEO, Matt Reintjes. Please go ahead.

Thanks, everyone, for joining us. We look forward to connecting on our fourth quarter call. Have a wonderful rest of the week.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.